On September 4th, following sharp declines in both U.S. and Asian stock markets, where some major stocks plummeted nearly 10%, Bitcoin briefly dipped below $55,000, according to CoinMarketCap. It is now trading at $56,305.06, down 5.01% for the day.
Ethereum also fell below $2,400, currently priced at $2,365.5, marking a 6.21% decline. Additionally, Solana dropped by 14%, and other major cryptocurrencies such as BNB, TON, and DOGE also experienced significant losses.
This downturn follows a poor performance in the U.S. stock market, where tech giant NVIDIA led the Dow Jones Industrial Average down by 600 points. Across the Pacific, Japan’s Nikkei Index opened 1,000 points lower than the previous day’s close.
According to data from Coinglass, the total liquidation across the entire crypto market in the past 24 hours reached $197 million. Bitcoin accounted for $54.22 million of these liquidations, while Ethereum saw $48.45 million.
Notably, long positions suffered the most, with $172 million liquidated, compared to $25.24 million for short positions. Approximately 76.02% of the liquidations were long positions.
Google Finance reported that stocks related to cryptocurrencies also saw slight declines. Coinbase dropped by 7.76%, with its share price currently at $169.13. MicroStrategy fell by 7.6%, with its stock price at $122.32. Bitcoin mining companies Marathon Digital and Riot Platforms also saw slight declines in their stock prices.
According to CoinDesk, on Tuesday, the Nasdaq 100 Index and the S&P 500 Index saw declines of up to 3.5%, kicking off what could be a historically bearish September. Weak manufacturing data has reignited fears of an economic slowdown.
This downward trend extended to Asian markets, with Japan’s Nikkei Index dropping over 4% within hours of opening, exacerbating the turbulence caused by unwinding yen carry trades last month.
The U.S. Institute for Supply Management (ISM) reported that its manufacturing index fell for the fifth consecutive month in August. Although there was a slight rebound from July, the index remained below the 50 threshold, indicating a contraction in manufacturing activity. This index is a key indicator of the overall economic health of the U.S. manufacturing sector.
Moreover, the anticipated Fed rate cut, which had initially been seen as a positive development, may no longer be a bullish signal. In a report on September 2nd, Bitfinex analysts wrote, “If we were to speculate, we would cautiously expect Bitcoin prices to drop by 15-20% following a rate cut this month, with a possible low around $40,000 to $50,000.”
“However, this logic could easily be overturned if macroeconomic conditions change,” the analysts reiterated. They emphasized that “September has historically been a volatile month for Bitcoin, and the expected Fed rate cut adds another layer of complexity that could heighten market volatility.”
The report continued, “This is an uncertain period for traders.” The Federal Reserve’s interest rate decision is scheduled for September 18th. After Fed Chair Jerome Powell’s dovish remarks in August, where he stated that “the time has come,” market sentiment has been optimistic about the Fed cutting rates.
However, Bitfinex analysts also noted that while August ended on a down note, September has occasionally outperformed expectations and delivered positive returns. “This could counter the assumption that September is invariably a bearish month for Bitcoin.”
Additionally, Rekt Capital mentioned that if Bitcoin does experience a pullback this month, October typically sees a significant double-digit increase of around 22%, offering a glimmer of hope for Bitcoin enthusiasts.
Cryptocurrency expert Noelle Acheson believes that Bitcoin could break the $100,000 mark, though it’s unlikely to happen this year. If political uncertainties are resolved favorably—such as if former President Donald Trump wins in November or if Vice President Kamala Harris expresses support for cryptocurrency development—then this milestone is certainly achievable, especially considering the potential for a looser interest rate cycle.
However, Acheson added, “This year’s performance has been weaker than other cycles, likely due to political factors and the AI hype.”
Acheson believes that the $63,000 to $65,000 range is crucial for Bitcoin’s market dynamics, viewing this range as a key indicator of market strength, as it reflects the cost basis for short-term holders and ETF buyers.
“We expect some traditional financial risk mitigation and selling events following the actual rate cut in September, which will lead to a price drop. However, as long as the stock market maintains strong momentum in Q4 2024, we expect the consolidation period to end by then,” Acheson concluded.