As a seasoned crypto investor with over a decade of experience in this dynamic market, I find myself standing at a crossroads amidst the current turbulence in Bitcoin’s trajectory. The recent drop from $59,076 to $58,036 is not unfamiliar territory for me; it’s a dance we’ve been doing since the early days of Bitcoin.
Yesterday, Bitcoin was priced at $59,076, but dipped as low as $57,127 during the early trading hours in Asia today. By the end of the week, it closed at $57,565, marking another loss that hinders a potential bullish turnaround. The course is influenced by multiple elements.
#1: Macro Fears Of A Recession
The potential for an economic downturn in the U.S. is creating noticeable anxiety within financial circles, and this is particularly relevant to Bitcoin, as it hasn’t experienced a complete economic slump since its creation.
In preparation for the Federal Open Market Committee (FOMC) meeting on September 17-18, 2024, there’s been a lot of talk about monetary policy. There’s a strong sense that interest rates might be reduced following comments made by Jerome Powell at the Jackson Hole Symposium. The CME FedWatch tool suggests that this expectation is universal, predicting a change in rates.
69% of experts anticipate a small 0.25% decrease in interest rates, while 31% foresee a larger 0.50% reduction. According to crypto analyst Tom Capital, these substantial reductions might indicate an economic crisis rather than minor adjustments, making it more challenging for investors to predict Bitcoin’s investment future.
“Tom Capital stated via X that a 50 basis point reduction by the FED is undeniably an emergency move. If your belief in a crypto market surge is built on anticipation of significant interest rate decreases, it might be beneficial to reevaluate this stance. Similarly, analyst Skew (@52kskew) emphasized the significance of forthcoming US economic statistics, notably the BLS jobs report scheduled for September 6.”
Tom Capital stated: “In the days leading up to the Non-Farm Payrolls report on Friday, it’s important to see weak employment figures. There’s a possibility that the report itself could be surprising, even by 50 basis points. Considering the inconsistency of data, such an outcome isn’t implausible. However, I believe the more likely scenario is a risk-off move if the Non-Farm Payrolls report is particularly poor. This downturn might begin in the Nasdaq market.”
#2: Bitcoin Seasonality
Rekt Capital, a cryptocurrency expert, shared thoughts on how seasonal trends influence Bitcoin. Looking back at Bitcoin’s history since 2013, it has shown varying results in the month of September – sometimes showing growth, while other times experiencing declines.
According to an analysis by Rekt Capital, while Bitcoin has historically shown positive returns in the range of 2.35% to 6.04% for three out of six Septembers since 2013, it has also experienced negative monthly returns ranging from -1% to -7.5%. Notably, there have only been two instances where Bitcoin’s downside exceeded 10%, specifically -19.01% and -13.38%. Despite this, on a broader scale, September is generally a period of consolidation in the market.
#3: Low Bitcoin Sentiment
According to Ali Martinez’s findings from examining data related to cryptocurrency exchanges, there’s been a prolonged decrease in investor engagement and network activity. In other words, his Exchange Volume Momentum indicator indicates a persistent drop in crypto exchange-related on-chain actions, which often signals decreased Bitcoin investment and reduced network utilization. This could imply that the initial excitement surrounding Bitcoin has waned somewhat, possibly having a negative impact on its value.
Martinez added, “Bitcoin miners sold 2,655 BTC over the weekend, worth around $154 million!”
The upcoming weekly close for Bitcoin isn’t looking promising. If Bitcoin can’t break above approximately $58,450 during this weekly closing period, it may not be able to maintain its current support level, which is around the same price. Ideally, a weekly close slightly above $59,000 would be beneficial for Bitcoin as it would help push the price above a previous higher low from early July.
At press time, BTC traded at $58,036.
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2024-09-02 12:40