Bitrabo Editorial
On September 6, 2024, Bitcoin dropped under $54,000 after reaching as high as $57,000 earlier that day, influenced by the US nonfarm payroll numbers. The jobs report revealed only 142,000 jobs were added in August, falling significantly short of expectations, which resulted in a turbulent crypto market.
This sharp decline caused widespread disruption in the cryptocurrency ecosystem. After hitting a low of $53,780, Bitcoin experienced a 4% loss within 24 hours, trading at around $54,101. Following the disappointing job growth, speculations regarding potential interest rate cuts by the Federal Reserve emerged, with a 70% likelihood forecasted for a 25 basis-point reduction at the forthcoming FOMC meeting on September 18.
Decline in Altcoins
Bitcoin’s downturn was mirrored in the altcoin market. Significant coins such as ether fell by 4.6%, trading at $2,261, while Ripple’s XRP and DOGE also faced losses exceeding 4%.
Market Instabilities and Liquidation
The significant price fluctuations led to heavy liquidations within the crypto space. Reports indicated that around $93 million was liquidated within a four-hour window, primarily affecting leveraged long positions that traders had planned for a continued price increase.
Impending Fed Rate Decisions
The lackluster jobs figures may signal impending changes in interest rate policies. Some market players anticipate potential rate cuts, estimating a 70% chance for a 25-basis point reduction in the next FOMC meeting scheduled for September 18.
“The impact of the cut—whether positive or negative—will depend on economic reports and Fed comments, but on balance, I believe a 25 bps cut is better for asset prices than a 50 bps cut,” said Sean Farrell, head of digital asset research at Fundstrat.
A smaller rate cut is deemed more beneficial for risk assets, as a 50 basis point reduction might raise concerns about a possible recession in the US economy. The actual implications will be determined by forthcoming economic data and Fed guidance.
Bitcoin’s Resilience amidst Market Drop
Despite the general market downturn, data suggests that bearish sentiment towards Bitcoin is limited. This indicates that the existing bearish trend may be attributed to less aggressive selling.
Although Bitcoin’s inability to sustain above $54,000 after the US jobs report highlights volatility in the cryptocurrency landscape, expectations of a central bank rate cut have added uncertainty, prompting market participants to closely monitor the Fed’s next steps.
In line with Bitcoin, altcoins have also experienced significant declines, dropping below crucial resistance levels as the larger crypto market retracts. Analysts suggest that the downward pressure may not be as severe as it appears.
Image source from Pexels, chart data from TradingView