Bitcoin fell below $54,000 on September 6, 2024, after hitting $57,000 earlier in the day following the release of U.S. nonfarm payrolls. The report showed that the economy added just 142,000 jobs in August, falling well short of expectations and sending the cryptocurrency market into volatility.
This sudden turnaround has sent the crypto ecology into a downward spiral. After hitting a low of $53,780, Bitcoin has lost about 4% in the last 24 hours and is trading at $54,101. After the dismal jobs tally, speculation has been swirling about a Federal Reserve interest rate cut; estimates put a 70% chance of a 25 basis point cut at the next FOMC meeting on September 18.
BTC down in the last 24 hours. Source: Coingecko
Altcoins are also in the red
The selloff wasn’t unique to bitcoin. Major altcoins also saw declines: ether fell 4.6% in the past 24 hours, trading hands at $2,261. Other cryptocurrencies that saw notable losses included Ripple’s XRP and DOGE, down more than 4% each.
Liquidations and market turbulence
The wild price swings led to heavy liquidations in the cryptocurrency market. According to some reports, around $93 million was liquidated in a span of four hours. These liquidations largely belonged to leveraged long positions that caught traders off guard who were expecting further upside.
BTC market cap currently at $1.07 trillion. Chart: TradingView.com
Potential Fed Rate Cut Looms
The disappointing employment figures have sparked speculation about the next move in interest rates. Some investors are now expecting a possible rate cut, with a 70% probability of a 25 bps cut at the next FOMC meeting on September 18.
“Ultimately, the nature of the decline – whether bullish or bearish – depends on the economic data and Fed commentary, but all things being equal, I still view 25bps as better for asset prices than 50bps,” said Sean Farrell, head of digital asset research at Fundstrat.
A smaller cut would be more supportive for risk assets, as a 50bp cut could suggest that the Fed is concerned about a recession in the US economy. The nature of the cut will depend on economic data and Fed commentary.
Bitcoin: Bearish pressure remains weak
Although the market as a whole is declining, data shows that bearish pressure on Bitcoin remains weak. This indicates that the current bearish momentum could be due to less aggressive selling pressure.
While Bitcoin’s failure to hold above $54,000 after the US jobs report highlights some volatility in the cryptocurrency market, a potential rate cut from the central bank has increased uncertainty and prompted market participants to closely monitor the Fed’s next decision.
Like all other cryptocurrencies, altcoins have also been battered and have fallen below their key resistance levels, leading to a pullback in the crypto market as a whole. According to analysts, the bearish pressure may not be as severe as it seems.
Featured image from Pexels, chart from TradingView
