(Kitco News) – Asset prices from stocks and gold to crypto trended lower in early trading on Tuesday following the long holiday weekend in the U.S. as traders braced for September, which is historically a tough month for markets.
The August jobs report is due for release on Friday, and market watchers will be closely monitoring the data to see how much of a factor it plays into the Fed’s September interest rate decision. Following the July jobs report, which showed signs of slowing — often an early warning sign for a broader slowdown — Wall Street is closely monitoring the situation for any additional signs of stress that could result in the Fed responding with larger rate cuts.
Following a weekend dump and pump that saw Bitcoin (BTC) drop to $57,200, the top crypto found itself in the same position it was in on Friday, fighting to hold support at $59,000, with bears looking to gain ground.
BTC/USD Chart by TradingView
At the time of writing, Bitcoin trades at $57,805, a decrease of 1.45% on the 24-hour chart.
“The crypto market rose 2.3% in 24 hours to reach a cap of $2.07 trillion, growing steadily throughout Monday,” said Alex Kuptsikevich, senior market analyst at FxPro. “However, cautious Asian market dynamics on Tuesday morning have interrupted the recovery near levels seen late last week. This recovery has yet to improve sentiment, with the index remaining at 26 for the third consecutive day.”
“Bitcoin is trading just below $59K at the start of active trading in Europe, having reached $59.7K at the peak of the Asian session,” he added. “Despite intraday fluctuations, the BTC exchange rate has closed in the $59.0-59.3K range for the past six days, reflecting the balance of power. The local initiative remains with the bears, as the price is below the 50- and 200-day moving averages and close to the lower boundary of the descending channel.”
According to Casey Grooms, co-founder of Soulbound, the ongoing weakness in the crypto market is expected as the headwinds facing the global economy mount and the discussion around interest rates continues to evolve.
“The price of Bitcoin has dropped by [10.3]% in the past seven days, falling to a low of [$57,146],” Grooms said in a note shared with Kitco Crypto. “This price action is justified, as this period is marked by high macroeconomic uncertainty, with a crucial Federal Interest pivot shaping sentiments.”
“Despite the assurance of rate cuts, Fed Chairman Jerome Powell said the move is data-dependent,” he noted. “The Fed's preferred inflation gauge, the Personal Consumption and Expenditure (PCE) reading, held steady at 2.5%. With the closeness to the basic target of 2%, the interest rate cut pivot may happen sooner than expected.”
“Though the Federal Reserve is the most watched central bank in the financial world, other central banks, like the Bank of England and the Bank of Canada, are already cutting rates overall,” Grooms added. “If these monetary policies become prevalent, global financial market liquidity is bound to increase, a trend that might crunch the buying power of fiat.”
For now, traders must attempt to navigate the historically volatile month of September without suffering major losses or getting shaken out of their positions.
“September has traditionally been a volatile month for Bitcoin, with an average return of 4.78 percent and a typical peak-to-trough decline of 24.6 percent,” said analysts at Bitfinex. “This volatility is often attributed to the end of the summer trading lull, as fund managers return from vacation and human-driven trading activity increases. The anticipated rate cut in September adds another layer of complexity, potentially exacerbating the marketʼs volatility.”
“This historical price action for September also aligns with our view of a projected 20 percent drop in Bitcoin prices following a rate cut,” they added. “However, itʼs worth noting that historical trends also show that when August ends in the red, September has occasionally defied expectations and delivered positive returns. This could provide a counterargument to the assumption that September will necessarily be a bearish month for Bitcoin.”
