Major cryptocurrencies plummeted after major US stock indexes closed significantly lower on Tuesday. The plunge was led by Nvidia (NVDA) and other chipmaker stocks, as September began on a weaker-than-expected note after a strong finish to August.
As a result, crypto markets tanked as well, with major cryptocurrencies, including Bitcoin (BTC), Ethereum (ETH), Solana (SOL), Polkadot (DOT), and others registering substantial declines.
BTC dropped almost 5% over the past 24 hours, while ETH fell by almost 6%, plunging below the crucial $2,400 level. SOL also dropped almost 6%, dropping it below $130, while DOT is barely hanging on to $4.
Bitcoin (BTC) Loses Traction
Bitcoin (BTC) dropped to a low of $55,676 before climbing back above $56,000 as crypto markets tumbled following a decline in the traditional stock markets. The world’s largest cryptocurrency has lost significant ground, having dropped almost 5% in the past 24 hours, and could struggle to get back to $60,000. Traders have attributed the drop to the broader macroeconomic environment. However, there are other factors at play as well.
One trader explained that concerns around a recession in the US have influenced BTC.
However, with the trend now stabilizing and the focus shifting to monetary policy and the US Dollar’s performance, BTC’s bullish narrative will depend on the expectation of a looser Federal Reserve policy, like lowering interest rates. This means traders anticipate that the US will be compelled to implement expansionary measures to stimulate the economy.
“The bottom of #Bitcoin may be in. There’s a new bullish narrative for Bitcoin driven by looser Federal Reserve policy and global macro trends. After a bearish phase in early August, expectations of the Fed easing monetary policy, such as lowering interest rates, have boosted optimism for #Bitcoin. This shift in sentiment marks a “tactical bottom” for Bitcoin, potentially signaling the start of a new bull run. $BTC is now less influenced by US recession concerns and more by monetary policy and the US dollar’s performance.”
The US jobs report, scheduled for September 6, could also have a significant impact. Economists from Morgan Stanley anticipate that the US added 185,000 new jobs in August, a number sufficient to support a 0.25% rate cut. However, skepticism among traditional investors persists, and this became apparent when Nvidia, which reported earnings exceeding market expectations, dropped 6% during the following trading session.
Spot Bitcoin ETF Outflows And Declining Miner Profitability
Another reason behind BTC’s lagging price and pessimism is the significant outflows witnessed by spot Bitcoin ETFs. With the instruments failing to attract inflows and seeing significant outflows, they are at the receiving end of considerable negative press. Between August 27 and August 30, spot Bitcoin ETFs registered $480 million in net outflows, wiping out the $455 million in inflows received the two days prior. While this may be considered normal, it could generate doubt among traders regarding BTC’s future price movements.
Bitcoin investors are also concerned that miner profitability, which is near all-time lows, could spark a selloff. Miners currently hold over 1.8 million BTC, a figure that has remained unchanged over the past couple of months, sparking concern among investors. Adding to this concern is the recent decline in Bitcoin’s hashrate index, which has dropped from $48 per PH to $42 per PH per day.
Breakout Or Breakdown?
So, is BTC heading for a breakout or breakdown? Analysts have predicted three major events that could drive the price of BTC higher and possibly break its downward trend of the past few months. According to Mena Theodorou, the co-founder of Coinstash, BTC’s next major price action depends on how the market responds to upcoming political and regulatory shifts in the US and upcoming macroeconomic data.
“Whether it’s a breakout or a dip will likely depend on the next major piece of news or market shift [...] for now, the market seems to be in a bit of a ‘wait and see’ mode.”
Josh Gilbert, eToro’s market analyst, stated he was looking forward to the upcoming Federal Open Market Committee meeting on September 18, which could act as a major catalyst for BTC. Most analysts expect that Federal Reserve Chair Jerome Powell will cut interest rates by up to 0.525%, which could significantly lift risk assets such as Bitcoin.
“The bottom line is that a rate cut is coming, but the focus is now on the size of that cut. US jobs data this week will be a key driver of the expectation and could see a move in crypto assets.”
Ting Wang, Cointash CEO, also stated investors must look out for upcoming US employment data, which is set to be released on Friday.
“The July unemployment rate came in higher than expected, raising concerns about a possible recession. The unemployment rate is famously known as a double-edged sword. On one hand, a higher-than-expected rate could signal a greater chance of recession, which isn’t great news. On the other hand, it could actually be positive for the market because it might give the Fed more reason to cut interest rates.”
Bitcoin (BTC) Price Analysis
Bitcoin (BTC) took a significant tumble early in the session, dropping to a low of $55,663 before buyers propped the price back above $56,000. However, with markets in the red, BTC faces significant selling pressure and could face difficulty reclaiming previous support levels unless a significant trigger pushes the price higher. As we can see in the price chart, BTC has primarily been in the red since the weekend. Sellers attempted to drag the price below $58,000 on Friday as it fell to a day low of $57,733. However, buyers could counter the selling pressure and push BTC back above $59,000.
Source: TradingView
BTC registered a marginal drop on Saturday before falling almost 3% on Sunday, ending the weekend at $57,399. However, BTC had support around the $57,000 price level and rebounded on Monday, registering an increase of just over 3% to settle at $59,169. On Tuesday, buyers attempted a move above the 20-day SMA and the $60,000 price level. However, BTC was rejected from these levels thanks to strong selling pressure. As a result, sellers took over, driving BTC down by 2.77% to $57,529. With global markets witnessing a trillion-dollar wipeout, BTC also registered a significant drop during the ongoing session as it slipped below $57,000 and fell to a low of $55,663. The cryptocurrency currently trades around the $56,500 price level, down almost 2%.
Bears will look to continue their stranglehold on the market and drive BTC below $55,000, the next level of support. Meanwhile, buyers will attempt to gather momentum and reclaim $57,000 before any further moves. BTC must break above the $60,000 and $65,000 levels for a proper reversal in sentiment. This would mean bears are losing grip, and bulls are gaining the upper hand. If BTC breaks above these levels, it faces a cluster of resistance between $70,000 and $74,000.
Ethereum (ETH) Price Analysis
Ethereum (ETH) has dipped below the $2,400 mark and could be poised for a significant downturn should its price close below $2,300. ETH has struggled almost all of August, with bearish sentiment plaguing the asset. The trend has continued in September, as ETH starts the month on a bearish note, with negative sentiment potentially intensifying should current price action continue. ETH had been trading between $2,400 and $2,600 as it struggled to break above the 20-day SMA.
Source: TradingView
The world’s second-largest cryptocurrency ended the weekend in the red, dropping 3.44% and settling at $2,428. With the $2,400 support level holding on, ETH rebounded on Monday, rising by 4.55% to push back above $2,500 and settle at $2,529. However, buyers lost momentum as demand dried up closer to $2,600, allowing sellers to take over on Tuesday. As a result, ETH dropped by 4.49% on Tuesday, falling below $2500 and settling at $2,425. Sellers continue to control the market during the ongoing session as well, driving ETH to a low of $2,310. However, buyers have pushed back, with ETH back up to $2,389 as it looks to reclaim the crucial $2,400 level.
If ETH closes below $2,300, it could decline further and drop to $2,200 or even $2,100. This is why it is crucial buyers reclaim $2,400. However, the sentiment around ETH is considerably bearish, with the MACD currently bearish and the RSI trading below the neutral 50 level.
Solana (SOL) Price Analysis
Solana (SOL) is attempting to reclaim the $130 price level after falling below it on Tuesday as sellers continue to exert influence on the asset’s price. SOL’s recent bearish trend has seen the altcoin drop over 13% during the past week. As we can see in the price chart, SOL has been struggling to break out a downward trend since its rejection at $160, with the price dipping below the moving averages towards the end of August, signaling an intensification of bearish sentiment.
Source: TradingView
By the end of August, SOL had dipped below $140 and settled at $135. Those expecting a positive start to September were in for a disappointment as SOL continued to decline, dropping just over 5% to begin September below $130, as it settled at $128. Despite the bearish sentiment, SOL started the current week on a positive note, rebounding from its low to register an increase of 4.98% to push back above $130 and settle at $135. Once again, sellers prevented a further increase in price as SOL dipped by 5.47% on Tuesday to slip back below $130 and settle at $127. Sellers attempted to breach $120 during the ongoing session as SOL dropped to a low of $122. However, buyers withstood the selling pressure at lower levels, overwhelming the bears and pushing SOL back above $130. Currently, SOL is up by almost 3% and trading at $131.
SOL has strong demand at the $120 price level, which buyers are expected to defend vigorously to prevent a further downturn. For sentiment to flip, SOL must close above $130. Doing so would set it up for a push towards $140. A successful push above this zone could see the SOL push towards $150.
Fantom (FTM) Price Analysis
Fantom (FTM) ended August on a bearish note, as it slipped below the 50-day SMA after failing to stay above $0.50. Buyers attempted a recovery after FTM< dipped to $0.42 on August 28 but could not build momentum. As a result, FTM could not make any significant price movements and ended August at $0.42. The month started with selling pressure intensifying as FTM dropped almost 5% on Sunday, slipping below $0.40. The price quickly rebounded on Monday, rising by nearly 6% and returning to $0.42.
Source: TradingView
However, with intense selling pressure at upper levels and the 20 and 50-day SMAs acting as resistance, FTM dropped almost 9% on Tuesday. The current session sees FTM marginally down as sellers look to extend their influence and push the price even lower. FTM’s RSI is just under 50, close to neutral but indicating a bearish inclination. However, sentiment around FTM could change as Fantom gears up for the launch of the Sonic testnet, which goes live next week. Sonic is Fantom’s most ambitious upgrade yet and promises significant improvements in speed and scalability, along with a host of new features.
Bittensor (TAO) Price Analysis
Bittensor (TAO) has plummeted almost 8% over the past 24 hours and a staggering 18% over the past week as top AI tokens faced a crippling decline. The drastic decline can be blamed on chip giant Nvidia registering a sharp decline on September 4, with its stock plummeting by almost 10%, leading to a staggering $270 billion decline in the company’s market capitalization. This was the largest drop in market cap for a US company in history. After it was revealed the US Department of Justice had subpoenaed Nvidia, the company’s stocks continued to decline during after-hours trading.
Source: TradingView
Following the news, tokens such as AKT, FET, RNDR, and TAO saw double-digit declines before recovering some losses. TAO, which had already been struggling in recent weeks, started the month with a drop of almost 6%, dragging its price down to $264. However, it quickly rebounded on Monday, rising over 6% and settling at $280. The price tanked Tuesday, dropping over 11% to slip below $250 and settle at $248. Sellers dragged TAO to a low of $240 during the current session, but the price has since recovered some of its losses and is currently trading at $255, up by almost 3%.
Celestia (TIA) Price Analysis
Celestia (TIA) is struggling to stay above its support level as a lack of buying activity continues to stall the momentum for bulls. TIA has been in a downward trend since failing to push above $6.05 on August 24, losing several key support levels as its price plummeted. By the end of August, TIA had slipped below $5 and was trading at $4.49. The past month has seen TIA drop by almost 20%. The new month saw bearish sentiment persist, with TIA dropping nearly 6% on Sunday and settling at $4.24.
Source: TradingView
The price rebounded on Monday, rising by 5.71% and settling at $4.47. However, buyers could not push above $4.50, and sellers retook control on Tuesday, with TIA dropping over 9% to $4.06. Once again, TIA’s support held, and buyers could push the price back up from a low of $3.88 to its current $4.19, an increase of just over 3%. TIA has strong support at $4, which could prevent a further price decline. Buyers must reclaim the $4.50 level to reverse sentiment and push towards $5, where a downward-sloping 20-day SMA is acting as resistance.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
