U.S. stocks tracked by the Nasdaq 100 and S&P 500 fell as much as 3.5% on Tuesday, kicking off a historically bearish September.
BTC fell to $55,500, its lowest level since Aug. 8, reversing nearly all of its gains over the past month.
The Institute for Supply Management (ISM) manufacturing index fell for the fifth consecutive month in August, rebounding from July but still below the 50 threshold.
Bitcoin (BTC) fell to its lowest level since early August in early Asian trading on Wednesday, following sharp declines in U.S. and Asian stock markets, with some major stocks falling nearly 10%.
BTC fell to $55,500, its lowest level since Aug. 8, reversing nearly all of its gains over the past month. Major tokens Solana’s SOL and Ether (ETH) fell more than 7%, leading the decline.
U.S. stocks tracked by the Nasdaq 100 and S&P 500 fell as much as 3.5% to kick off a historically bearish September as weak manufacturing data reignited concerns about an economic slowdown. The move spread to Asian markets, with Japan's Nikkei 225 tumbling more than 4% within hours of opening, adding to volatility from last month's unwinding of yen carry trades.
Bitcoin could fall 20% after Fed rate cut, but September weakness presents buying opportunity
Cryptocurrency investors had been expecting a September rate cut by the Federal Reserve to fuel the bull run following months of lackluster price action, but escalating recession fears could bring a deeper correction.
If an easing cycle coincides with a recession, Bitcoin (BTC) could fall 15%-20% after the September rate cut. This would mean that the price of Bitcoin would bottom out around $40,000-50,000.
“Typically, rate cuts are viewed as a positive catalyst for risk assets. A 25 basis point rate cut could mark the start of a standard rate-cutting cycle, which could lead to a long-term rally in Bitcoin prices as recession fears ease. Such a move would signal the Fed’s confidence in the economy’s resilience, reducing the likelihood of a severe recession.”
It will be brighter after September
Cryptocurrency analytics firm K33 Research noted in a report that all the pessimism in the coming month could present an attractive buying opportunity for investors as the following months will be more favorable.
“Historically, buying blood in September to build exposure for the fourth quarter has been the best spot strategy,” said Vetle Lunde, senior research analyst at K33.
Historically, October to April is Bitcoin’s strongest period. “If an investor had chosen to buy at the October open and sell at the April close, the return would have been 1,449% since 2019, while a trader who chose the opposite strategy would have had a negative net return,” Lunde said.
There are also a number of positive catalysts expected to drive strong year-end results, it added.
The massive selling pressure from various government agencies and Mt. Gox has largely abated, and while about $14.5 billion will be redistributed to FTX creditors later this year, bulls hope that some of that money can be reinvested in the cryptocurrency market.
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