Organization dedicated to digital asset research for wealth managers and cryptocurrency service providers, 10x Research released a market analysis suggesting that the recent drop in Bitcoin’s price appears to be a standard correction within a bull market following an overbought situation.
Markus Thielen, the founder of 10x Research, explained that in the previous week’s report, he had pointed out that Bitcoin seemed overbought in the short term, as indicated by elevated levels on the Fear & Greed Index. Current short-term reversal indicators have now shifted to a bearish outlook, suggesting that a correction is likely in the coming days.
The ISM Manufacturing New Orders data indicates that forward-looking indicators have declined to levels approaching a recession, creating uncertainty about upcoming figures. If the reading drops below 48.0, it may trigger another decline in Bitcoin prices. Conversely, a higher reading could potentially spark a rally.
Bitcoin Sold Off 10% During First Few Days Of Last Three Months
According to the firm’s report, most attention has focused on US employment data, but the ISM Manufacturing Index has actually triggered a 10% market correction in the first week of each of the last three months. Despite this, employment data has played a pivotal role in shaping market sentiment. Weaker employment numbers intensified recession fears, leading to increased expectations of Federal Reserve rate cuts, while stronger employment figures reassured investors about the economy’s resilience, countering the implications of the ISM Manufacturing Index.
Although the ISM likely provides an accurate reflection of the economy, the market has been interpreting employment data through the perspective of lower inflation, expecting that this would offer the Federal Reserve more room for aggressive monetary actions. In July, the firm pointed out that the ISM could signal the end of the current Bitcoin cycle, making this month’s ISM data crucial for assessing the US economy’s outlook.
Further insights into the Federal Reserve’s potential course of action might be revealed later today, as Chairman Jerome Powell is set to address the economy at the National Association for Business Economics annual meeting in Tennessee.
Markus Thielen also shared his positive outlook for the fourth quarter, with much of this optimism rooted in expectations that the Federal Reserve might reduce rates by an additional 50 basis points, along with China’s recent announcement of extensive stimulus measures.
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