Bitcoin, the leading cryptocurrency, experienced a significant drop in value from $59,076 to $57,127 during the early Asian trading session, highlighting its vulnerability to external factors. One of the looming threats is the US recession, which has instilled palpable tension in financial markets. This is particularly crucial for Bitcoin, as it has yet to undergo a complete economic downturn since its inception.
The Federal Reserve’s upcoming Federal Open Market Committee (FOMC) meeting on September 17-18, 2024, has intensified discussions around monetary policy. The anticipation of a rate cut, solidified by remarks from Jerome Powell at the Jackson Hole Symposium, has led to a unanimous expectation of a rate adjustment according to the CME FedWatch tool. While a 25 basis points cut is the primary prediction with a 69% inclination, a smaller group foresees a more aggressive 50 basis points reduction. Crypto analyst Tom Capital warns that such drastic measures could indicate an impending economic crisis rather than just adjustments, complicating the investment outlook for Bitcoin.
US Economic Data Releases
Analysts like Skew (@52kskew) emphasize the significance of upcoming US economic data releases, particularly the BLS jobs report scheduled for September 6. Tom Capital highlights the need for unfavorable jobs data leading up to the NFP on Friday to trigger a 50 bps cut, although the unreliability of data complicates predictions. Despite the possibility of a substantial NFP shock, the potential risk-off move could have adverse effects on Bitcoin.
Seasonal Patterns and Network Utilization
Rekt Capital, another crypto analyst, delves into the historical data dating back to 2013, revealing mixed performance for Bitcoin in September. While some years have seen gains, others have experienced losses, ultimately characterizing September as a month of consolidation. On the other hand, Ali Martinez points out a sustained decline in investor interest and network utilization through the Exchange Volume Momentum indicator, indicating decreased enthusiasm for Bitcoin and potentially imposing negative pressure on its price.
The technical outlook for Bitcoin appears bleak as it failed to secure a strong weekly close. Rekt Capital emphasizes the importance of a Weekly Close above ~$58,450 to protect the Channel Bottom and establish it as support on a retest. With the current price hovering around this support level, an ideal close above ~$59,000 would position BTC above the blue Higher Low dating back to early July, thus providing some hope for a rebound. At the time of publication, Bitcoin was trading at $58,036.
Bitcoin’s trajectory remains uncertain due to a combination of external factors such as the looming US recession, Federal Reserve’s monetary policy decisions, upcoming economic data releases, seasonal patterns, and network utilization. As investors navigate through the volatile cryptocurrency market, it is essential to consider these key elements that could significantly impact Bitcoin’s future performance.