Bitcoin Drops Back to $58,000, Remains Subdued, But Upward Momentum Could Emerge Next WeekAugust has been a rough month for the world's largest cryptocurrency, with Bitcoin poised to end the month with a double-digit percentage decline. As of August 30th (CoinDesk), Bitcoin prices continued to trade sideways or move lower, down 12% for the month
Bitcoin Drops Back to $58,000, Remains Subdued, But Upward Momentum Could Emerge Next Week
August has been a rough month for the world's largest cryptocurrency, with Bitcoin poised to end the month with a double-digit percentage decline. As of August 30th (CoinDesk), Bitcoin prices continued to trade sideways or move lower, down 12% for the month. The trend of Bitcoin rising during Asian trading hours and falling during US trading hours has been evident over the past few weeks. With new US economic data being released next week, upward volatility may reappear.
Over the past week, Bitcoin once again slid during the US trading session, falling back below $58,000 by midday Eastern time. Bitcoin is currently trading at $58,200, down roughly 4.4% over the past 24 hours, outperforming the broader market benchmark of the CoinDesk 20 index, which is down 5.6%. Index constituents like Ethereum (ETH), Chainlink (LINK), and Cardano (ADA) have slumped by more than Bitcoin. Solana (SOL) has been the worst performer, down 9%.
With just over 24 hours remaining until the end of August, Bitcoin has fallen more than 12% this month, completely erasing its strong gains from July. Ethereum is down 25% for the month, narrowing its year-to-date gains to 7%. Solana is similarly down 25%, leaving it up 31% for the year.
Asian Buys, US Sells
For those who think the weak price action is dj vu, you're not wrong. "Asian buy, US sell," Miles Deutscher wrote earlier Friday. According to Deutscher, over the past two weeks, Bitcoin has seen cumulative gains of over 5% during Asian trading sessions, contrasted by negative returns during the US trading session. "Like clockwork," he added minutes later, as Bitcoin once again sold off in early US trading.
Trend Change Afoot?
Despite positive factors like increased institutional adoption, a potentially more friendly regulatory environment, and upcoming Fed rate cuts, Bitcoin prices have fallen more than 20% since hitting an all-time high near $73,500 more than five months ago. Bulls may be finding it hard to imagine what could break this downtrend at the moment, but with the US Labor Day holiday ending next week, a fresh wave of economic reports could shift the macro narrative and get markets excited.
The key data point next week will be the August nonfarm payrolls report, released on Friday, September 6th. A weak July jobs report may have been the final straw that forced the Fed to promise rate cuts in September. However, the market is currently expecting a small 25 basis point cut in mid-September. However, if a second consecutive weak jobs report emerges, investors could quickly hike their expectation of a Fed rate cut to 50 basis points, which would provide a strong positive jolt for risk assets, including Bitcoin.
Of course, if the September jobs report comes in strong, expectations for easier monetary policy could cool. Whatever happens, volatility is likely to be ahead, with an upward move roughly 50% likely. That's all bulls can hope for at this point.
Bitcoin Price Action Analysis
- August Performance: Bitcoin prices are down 12% in August, completely erasing July's gains, suggesting a lack of market confidence in cryptocurrencies.
- Asian Buys, US Sells: This trend suggests that Asian investors may be optimistic about Bitcoin while US investors are more cautious.
- Macroeconomic Factors Influence: US economic data has a major impact on Bitcoin prices, particularly the Fed's monetary policy.
- Potential Uptrend Opportunities: If the September nonfarm payrolls report is weak, the Fed could cut rates significantly, providing a strong positive shock for risk assets, including Bitcoin.
- Volatility: Regardless of the outcome of the September jobs report, Bitcoin prices are likely to be volatile, but an upward move is more probable.
Conclusion
Despite recent weakness in Bitcoin, an opportunity for an upward move may emerge next week. US economic data, particularly the Fed's monetary policy, will be key in determining the trajectory of Bitcoin prices. Investors should closely monitor the September nonfarm payrolls report and be prepared for market volatility.
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