Concerns about a recession in the United States resurface, making it difficult to find direction for BTC
The real driving force of the market is still the Federal Reserve.Author: BitpushNews
The "September Curse" continues to loom over the financial markets, with U.S. stocks and the crypto market struggling on Wednesday.
Data from the U.S. Bureau of Labor Statistics' Job Openings and Labor Turnover Survey showed that job openings in the U.S. fell from a downwardly revised 7.91 million in July to 7.67 million, a figure that fell short of all economists' expectations. July's job openings dropped to the lowest level since early 2021, with an increase in layoffs, consistent with other signs of a slowdown in worker demand.
Following the data release, the Chicago Mercantile Exchange's FED WATCH tool indicated that the market currently expects a 49% chance of a 50 basis point rate cut by the Federal Reserve on September 18. Additionally, the U.S. 2-year/10-year Treasury yield curve turned positive for the second time since 2022, heightening investor concerns about a U.S. economic recession.
In the U.S. stock market, as of the close of the day, the S&P 500 and Nasdaq indices fell by 0.16% and 0.30%, respectively, while the Dow Jones index rose by 0.09%.
According to Bitpush data, Bitcoin fell below the support level of $56,000 early Wednesday, hitting an intraday low of $55,567, before bulls pushed it back above $58,000. As of the time of writing, BTC was trading at $58,010, down 0.25% in the last 24 hours.
The altcoin market showed mixed performance, with 1inch Network (1INCH) leading the top 200 tokens by market cap with a 21.6% increase, followed by Aave (AAVE) and GMT (GMT), which rose by 11.9% and 11.6%, respectively. Sun (SUN) fell by 9.2%, leading the declines, while Flux (FLUX) dropped by 8.5% and Toncoin (TON) decreased by 7.4%.
Currently, the total market capitalization of cryptocurrencies stands at $2.03 trillion, with Bitcoin's dominance at 56.5%.
"Difficult to Find Direction"
Analysts at Secure Digital Markets noted in their report: "Since last week, the RSI has been forming a bullish divergence, indicating that selling pressure may be easing. Despite these short-term signals, long-term technical indicators remain unclear, and Bitcoin is still in the middle of a long-term downtrend channel with no clear direction."
Market analyst Bloodgood warned that this weakness may persist for some time and could lead to Bitcoin falling below $50,000.
In the latest market update, Bloodgood stated: "The pullback in Bitcoin continues. Last week we discussed how the accumulation zone looks weak, and we saw a breakout of that level before the end of this week. A drop below the accumulation zone could confirm our theory that a new low may occur. If that's the case, then $46,700 is on the horizon, and it might be wise to place some bids around that level. If the bulls manage to push Bitcoin back above the breakout area around $59,000, this theory would be invalidated."
Aside from the correlation between assets like Bitcoin and tech stocks, Bloodgood indicated that the real driving force in the market remains the Federal Reserve.
He pointed out that the recent pullback of tech stock newcomer Nvidia dominated the market decline, with the crypto market following suit, but this won't change the long-term outlook for cryptocurrencies. He added: "More importantly, it will depend on how the Federal Reserve and the Treasury act to stabilize the stock market and keep bond yields at acceptable levels. Given the upcoming elections, they will act as soon as possible. The timing of the Fed's rate cut is earlier than expected, which is why the main goal for most should be not to be scared off by volatility during this period."
While investors are eagerly awaiting the first rate cut, crypto data analyst Brett reminded users on the X platform that historical data shows rate cuts are often accompanied by significant declines in stock prices, with no reason to believe this time will be different.
He analyzed on Twitter: "We are 15 days away from the Fed's first rate cut in this cycle. Using the same timeframe, I overlaid the following past rate cut cycles: 1981, 1990, 2000, and 2007. These four rate cut cycles match the data we see now (rising unemployment, 10-year/2-year inversion, etc.). The bullish view is that rate cuts are good for the market, which is true in the long run… but history shows that after a rate cut, the market typically rises for an average of 25 days, followed by an average of 13 months of sell-offs."
