Why is Bitcoin price down today?

Bitcoin's price is experiencing a downturn today, reflecting broader declines in global risk markets amid growing concerns about the economic outlook.

Recession Fears Weigh on Bitcoin and Stocks

As of Sept. 4, Bitcoin (BTC) has dropped 3.30% to around $55,600, its lowest level in a month. Similarly, S&P 500 futures have declined 0.4% after suffering their worst performance since the Aug. 5 market meltdown.

Crypto traders are bracing for increased market volatility as they await crucial economic data to gauge whether the United States is edging closer to a recession and how the Federal Reserve may respond with policy adjustments.

A jobs report due on Sept. 4 is expected to show a slowdown in the labor market, following data that indicated a fifth consecutive month of declining manufacturing activity. As the focus shifts from inflation to economic growth, weak macroeconomic data is exerting pressure on both stocks and risk-on assets like cryptocurrencies.

For example, the anticipation of a cooling labor market has coincided with $287.80 million in daily outflows from Bitcoin exchange-traded funds (ETFs), marking the longest outflow streak since June.

Bitcoin Open Interest and Funding Rates Signal Caution

Bitcoin’s recent decline is also reflected in the shrinking open interest (OI) in its futures market.

As of Sept. 4, the total value of outstanding contracts in the Bitcoin futures market was around $30 billion, down from its July peak of $37.50 billion. This decline suggests that traders are becoming less confident in Bitcoin’s short-term price prospects, leading them to reduce their open futures positions.

Additionally, intraday data reveals a significant drop in the funding rates for Bitcoin futures. Between Sept. 3 and Sept. 4, funding rates fell from 0.0074% per eight hours to 0.0007% per eight hours, indicating a decreased appetite for leveraged long positions.

In other words, fewer traders are betting on a near-term price increase for Bitcoin—another sign of caution as markets await the U.S. jobs data.