Bitcoin Drops Below $58K, Ether Hits 7-Month Low in Crypto Market Decline
Cryptocurrencies like Bitcoin and Ether experienced significant declines in tandem with the U.S. stock market’s substantial losses at the start of trading on Tuesday. The week ahead holds significance for U.S. economic data, with the initial report indicating weakness coupled with a rise in inflationary pressures. Historically, September has not been favorable for Bitcoin prices.
In the early hours of U.S. stock market activity following the Labor Day holiday, Bitcoin (BTC) dropped 1.5% to $57,800, while Ether (ETH) fell by 3% to $2,442, marking its lowest level since February.
The CoinDesk 20 Index, a broad market indicator, only decreased by 1%, with a few components showing slight gains, notably lumens (XLMX) and Litecoin (LTC). The crypto market decline coincided with a notable stock market slump, with the Nasdaq down 2.4% and the S&P 500 falling 1.5%.
The release of U.S. economic data for August began with the ISM Manufacturing PMI report, revealing ongoing contraction at 47.2, slightly below the expected 47.5 and July’s 46.8. The report indicated a stagflationary trend, as New Orders decreased to 44.6 from July’s 47.4, while Prices Paid rose to 54.0 from 52.9.
Following the disappointing data, traders increased the likelihood of a 50 basis point Federal Reserve rate cut in September to 39%, up from 30% the previous day, according to CME FedWatch. However, the favored scenario remains a 25 basis point cut at 61%. The upcoming highlight in U.S. macro news is Friday’s release of the August employment report, with economists predicting a rebound in job gains to 160,000 from July’s 114,000, and a decrease in the unemployment rate to 4.2% from 4.3%.
Looking ahead, historical trends suggest that selling pressure may persist, especially after Bitcoin’s 10% decline in August. Galaxy Research chief Alex Thorn noted that Bitcoin has fallen in seven out of the last ten Septembers. Nevertheless, there is optimism as October typically marks Bitcoin’s best month of the year, with positive returns expected throughout the fall.
