The Bitcoin price dropped below $54,000 on September 6 as the flagship crypto experienced a massive wave of sell-offs from traders. This price decline was sparked by developments on the macroeconomic side, which painted a bearish outlook for Bitcoin.
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Bitcoin Slides Following Weak Job Report
Bitcoin’s price retreated following a weak August job report. Data from the US Bureau of Labor showed that the unemployment rate fell to 4.2% while the labor market added 142,000 nonfarm payroll jobs. While the unemployment rate was in line with expectations, the job additions were lower than the expected 164,000, initially estimated by market experts.
This further casts doubt on Bitcoin’s trajectory, considering how fragile the US economy looks at the moment. This poses a threat to risk assets like the flagship crypto. The bearish outlook for Bitcoin was further heightened by the revisions to the July and June job reports, which showed that the US added fewer jobs than was initially reported in those months.
Earlier, Bitcoin had already had an unpleasant start to September, which is historically very bearish for the leading crypto. NewsBTC reported that Bitcoin had suffered a price crash earlier in the week due to the markets still feeling the effects of the Yen carry trade and following significant volatility in the US stock market, with over $1.05 million being wiped out on September 3.
Macroeconomic factors remain primarily responsible for Bitcoin’s recent bearish price action and the broader crypto market, especially with a rate cut from the US Federal Reserve still in the balance. It is worth mentioning that the July job reports (the lowest job additions over the last two years) and the Yen carry trade were responsible for the August 5 market crash, which caused Bitcoin to drop below $50,000.
Interestingly, Arthur Hayes, the co-founder of the BitMEX crypto exchange, stated that he expects Bitcoin to drop below $50,000 this weekend, revealing that he had opened a short position.
A Rate Cut Looking More Unlikely
For a while now, the crypto market has been anticipating that the Fed will cut interest rates at its next FOMC meeting, which will be held between September 17 and 18. Bernstein analysts predicted that this move would provide some form of bullish momentum for Bitcoin’s price. However, a rate cut, especially by 50 basis points (bps), is now unlikely following the release of the job data.
Crypto commentator The Kobeissi Letter highlighted in an X (formerly Twitter) post that the odds for a 50bps have dropped to 23% on the prediction markets. The Fed might no longer be in a hurry to cut rates since the situation in the labor market isn’t as bad as it was initially feared following the release of the July jobs report.
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Whatever happens, crypto analysts like CryptoCon are confident that the worst is almost over for Bitcoin. CryptoCon recently noted that Bitcoin was mirroring its price action from the 2016 market cycle and suggested that the flagship crypto was gearing up for its next leg up, which would take it to a new all-time high (ATH).
At the time of writing, Bitcoin is trading at around $54,150, down almost 4% in the last 24 hours, according to data from CoinMarketCap.
Featured image from EastMojo, chart from TradingView