Bitcoin dropped below $54,000 On September 6, 2024, after rising earlier in the day to $57,000 following the US non-farm payrolls data. The report showed that the economy added just 142,000 jobs in August, which was far less than expected and threw the cryptocurrency market into a tailspin.
This sudden shift sent the cryptocurrency ecosystem into a tailspin. After hitting a low of $53,780, Bitcoin lost about 4% In the past 24 hours, it has traded at $54.101. In the wake of the dismal jobs report, there has been speculation about a rate cut by the Federal Reserve, with estimates suggesting a 70% chance of a 25 basis point rate 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 liquidation wasn’t limited to Bitcoin. Major altcoins also fell: Ether fell 4.6% in the past 24 hours, trading at $2,261. Other notable losses included Ripple’s XRP and DOGE, both down more than 4%.
Liquidations and market disruptions
The wild price volatility led to massive liquidations in the cryptocurrency market. According to some reports, around $93 million was liquidated in a span of four hours. These liquidations were mostly long-term buyers who surprised traders who were expecting further upside.
BTC market cap currently at $1.07 trillion. Chart: TradingView.com
The possibility of a Fed rate cut looms
The dismal jobs numbers have raised speculation about upcoming interest rate action. Some investors now expect Possibility of interest rate cutswith a 70% chance of a 25 basis point rate cut at the next FOMC meeting on September 18.
“Ultimately, the nature of the cut — whether it’s bullish or bearish — depends on economic data and Fed commentary, but all things being equal, I still see 25 basis points as better for asset prices than 50 basis points,” said Sean Farrell, head of digital asset research at Fundstrat.
A 50 basis point rate cut may be more appropriate for riskier assets, as a 50 basis point rate cut may signal that the Fed is concerned about a recession in the US economy. The nature of the cut will depend on economic data and Fed comments.
Bitcoin: Bearish pressure remains low
Despite the broader market decline, the data suggests that the downward pressure on Bitcoin remains low. This suggests that the current downward momentum may be due to non-aggressive selling pressure.
While Bitcoin failed to stay above the $54,000 level after US jobs report Highlighting some volatility in the cryptocurrency market, a potential central bank rate cut has added to the uncertainty and made market participants look closely at the Fed’s next move.
Like all other cryptocurrencies, altcoins have also taken a hit and fallen below key resistance levels, as the broader crypto market has been dragged down. According to analysts, the downward pressure may not be as serious as it seems.
Featured image by Pexels, chart by TradingView