Bitcoin fell below $54,000 on September 6, 2024, after cruising earlier in the day to $57,000 following the US nonfarm payrolls. The report showed that the economy added only 142,000 jobs in August, which was much below expectations and threw the crypto market into volatility.
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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.
BTC down in the last 24 hours. Source: Coingecko
Altcoins Also In The Red
The liquidation wasn’t unique to bitcoin. Major altcoins were also off: ether was down 4.6% over the past 24 hours, changing hands at $2,261. Others with notable losses included Ripple’s XRP and DOGE, each down more than 4%.
Liquidations And Market Turbulence
The wild swings in price ensured heavy liquidations occurred in the crypto market. According to some reports, about $93 million were liquidated within a four-hour frame. These liquidations largely belonged to leveraged longs that caught traders off guard who were expecting a further rally.
BTC market cap currently at $1.07 trillion. Chart: TradingView.com
Potential Fed Rate Cut Looms
The dismal jobs number has sparked speculation about upcoming interest rate actions. Some investors now expect the possibility of rate cuts, with a 70% chance seen for a 25-bp cut at the next FOMC meeting on September 18.
“Ultimately, the nature of the cut – whether bullish or bearish – depends on economic data and Fed commentary, but all things being equal I still view 25 bps as better for asset prices than 50 bps,” Sean Farrell, digital asset research head at Fundstrat, said.
A smaller cut would be more favorable to risk assets, since a 50bp cut could suggest the Fed is getting worried about a recession in the US economy. The nature of the cut will come down to economic data and Fed commentary.
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Bitcoin: Bearish Pressure Remains Low
Although the broader market is in decline, data shows that bearish pressure for Bitcoin remains low. This is indicative that the current bearish momentum might be due to unaggressive selling pressure.
While the failure of Bitcoin to hold above $54,000 after the US jobs report brings into light some volatility in the cryptocurrency market, a possible central bank rate cut increased uncertainty and made the participants in the market look closely at the next move from the Fed.
Like all other cryptocurrencies, the altcoins have also taken a beating and fallen below their key resistance levels, with the broader crypto market retreating. According to analysts, the bearish pressure might not be that serious as it seems.
Featured image from Pexels, chart from TradingView