Bitcoin fell below $54,000 on September 6, 2024, after cruising to $57,000 earlier in the day following U.S. non-farm payrolls. The report showed the economy added just 142,000 jobs in August, well below expectations and sending the crypto market into volatility.
The abrupt U-turn sent the crypto ecology into a tailspin. After hitting a low of $53,780, Bitcoin lost about 4% in the past 24 hours and traded at $54,101. After the dismal employment figures, speculation about a Federal Reserve rate cut was rampant; estimates put the probability at 70% of a 25 basis point cut 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 also fell, with ether down 4.6% in the past 24 hours, trading at $2,261. Other notable losses included Ripple’s XRP and DOGE, down over 4% each.
Liquidations and market turbulence
The wild price swings caused heavy liquidations in the crypto market. According to some reports, around $93 million was liquidated in a span of four hours. These liquidations were mostly from leveraged longs that surprised traders who were expecting a further rally.
BTC market cap currently at $1.07 trillion. Chart: TradingView.com
Possible Fed rate cut looms
The dismal jobs figure has led to speculation about impending interest rate cuts, with some investors now expecting the possibility of interest rate cutswith the probability of a 25 basis point rate cut at the next FOMC meeting on September 18 standing at 70%.
“Ultimately, the nature of the cut – whether bullish or bearish – will depend on economic data and Fed commentary, but all other things being equal, I still view 25 bps as better for asset prices than 50 bps,” said Sean Farrell, head of digital asset research at Fundstrat.
A smaller cut would be more supportive of risky assets, as a 50bp cut could signal that the Fed is starting to worry about a recession in the US economy. The nature of the cut will depend on economic data and commentary from the Fed.
Bitcoin: Bearish Pressure Remains Low
While the broader market is in decline, data shows that bearish pressure for Bitcoin remains low. This is an indication that the current bearish momentum could be due to non-aggressive selling pressure.
While Bitcoin failed to stay above $54,000 after the US jobs report brings some volatility to the cryptocurrency market, a potential rate cut by the central bank increases uncertainty and has market participants closely watching the Fed’s next move.
Like all other cryptocurrencies, altcoins have also taken a hit, falling below their key resistance levels as the broader crypto market retreats. According to analysts, the bearish pressure may not be as severe as it seems.
Main image from Pexels, chart from TradingView