As a seasoned crypto investor with over a decade of experience navigating through the digital asset market, I’ve seen my fair share of market turbulence and unexpected turns. The recent plunge of Bitcoin below $54,000 on September 6, 2024, following the disappointing US jobs report, is just another chapter in this rollercoaster ride we call crypto investing.
On September 6, 2024, Bitcoin dropped below $54,000, a decrease from its earlier high of $57,000, following the release of the US nonfarm payrolls report. This report indicated that only 142,000 jobs were added in August, significantly lower than forecasted, causing a ripple effect in the crypto market, leading to increased volatility.
The abrupt U-turn drove the crypto ecology into a tailspin. After striking a low of $53,780, Bitcoin lost roughly 4% in the past 24 hours and traded for $54,101. Following the dismal job count, there was conjecture on Federal Reserve interest rate cuts; estimates of a 70% probability of a 25 basis-point drop at the next FOMC meeting on September 18.
Altcoins Also In The Red
It’s important to note that the recent decline wasn’t exclusive to Bitcoin. Significant drops were also observed in major altcoins. For instance, Ether decreased by 4.6% within the last 24 hours, trading at around $2,261. Additionally, Ripple’s XRP and DOGE experienced notable losses, with each dropping more than 4%.
Liquidations And Market Turbulence
The dramatic fluctuations in value led to numerous forced sales (liquidations) happening in the cryptocurrency market. Some sources claim that approximately $93 million worth of assets were forcibly sold within just a four-hour period. Most of these liquidated positions were leveraged longs, surprising traders who had anticipated the market to continue rising.
Potential Fed Rate Cut Looms
The disappointing employment figures have fueled discussions about potential changes in interest rates. Now, some financial experts are anticipating the probability of rate reductions, with a likelihood of approximately 70% for a 0.25% decrease at the upcoming FOMC meeting scheduled for September 18.
In essence, the type of move in the market – whether it’s bullish or bearish – is influenced by economic data and remarks from the Fed, but if all factors remain constant, I personally believe that a 25 basis point increase is more favorable for asset prices compared to a 50 basis point increase, as expressed by Sean Farrell, head of digital asset research at Fundstrat.
It might be advantageous to opt for a less substantial reduction in risky investments, as a 50 basis point decrease could imply that the Federal Reserve is growing concerned about an impending recession in the U.S. economy. The specific size of the cut will depend on economic data and the Fed’s comments.
Bitcoin: Bearish Pressure Remains Low
Despite a general downturn in the wider market, Bitcoin’s data suggests that the pressure pushing it down (bearish pressure) is relatively modest. This implies that the current bearish trend could be primarily driven by a lack of intense selling activity.
The inability of Bitcoin to sustain its price above $54,000 post the U.S jobs report highlights some instability within the crypto market. Additionally, speculation about a potential central bank rate reduction has added an element of doubt and prompted market participants to carefully observe any upcoming decisions from the Federal Reserve.
Just like many other digital currencies, altcoins too have experienced a drop and are now struggling to surpass their significant resistance points. The overall cryptocurrency sector appears to be pulling back, but some experts suggest that the current bearish trend may not be as intense as it appears.
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2024-09-08 05:11