Bitcoin ETF Outflows Hit $287 Million as BTC Drops Below $56,000 Amid Recession FearsBitcoin ETFs witnessed daily outflows of $287.8 million as risk-off sentiment in both crypto and traditional risk markets intensified
Bitcoin ETF Outflows Hit $287 Million as BTC Drops Below $56,000 Amid Recession Fears
Bitcoin ETFs witnessed daily outflows of $287.8 million as risk-off sentiment in both crypto and traditional risk markets intensified. Bitcoin price dipped below $56,000 today, reflecting a broader decline in global risk markets due to concerns over economic prospects. Bitcoin is under pressure from recession fears, with stock markets declining, bringing BTC down 3.30% to around $55,600 as of September 4, hitting a one-month low. Similarly, S&P 500 futures dipped 0.4%, marking their worst performance since the market crash on August 5.
Cryptocurrency traders are bracing for more market volatility as they await crucial economic data to gauge whether the United States is nearing a recession and how the Federal Reserve might adjust its policies. Recent data showed manufacturing activity declining for the fifth straight month, and the September 4 jobs report is likely to show a slowdown in the labor market. As concerns shift from inflation to economic growth, weak macroeconomic data is putting pressure on risk assets like stocks and cryptocurrencies.
For instance, amid expectations of a cooling labor market, Bitcoin exchange-traded funds (ETFs) saw daily outflows of $287.8 million, marking the longest streak of outflows since June.
Bitcoin OI and funding rate data suggest caution. Bitcoin's drop today and in recent days has coincided with a decline in its futures market open interest (OI). As of September 4, open interest in the Bitcoin futures market was around $30 billion, down from a peak of $37.5 billion in July. The decline signifies that traders are less confident about Bitcoin's near-term price action and are reducing their open futures positions.
Meanwhile, intraday data reveals a significant drop in Bitcoin futures funding rates. Between September 3 and 4, the rates fell from 0.0074% per eight hours to 0.0007% per eight hours, indicating a reduced demand for leveraged long positions. In other words, there are fewer traders betting on a short-term increase in Bitcoin's price, another sign of risk-off sentiment ahead of the US jobs data release.
Technical charts suggest that Bitcoin's losses on September 4 are part of a breakdown phase for the current ascending wedge formation. An ascending wedge is characterized by two rising, converging trend lines. It resolves when the price decisively breaks below the lower trend line and drops to the maximum distance between the upper and lower trend lines, representing the breakout phase.
Therefore, the downside target for the BTC September ascending wedge breakdown sits at around $54,000, around 4.5% lower than the current price level. Conversely, a bounce from the current support level, which is the 0.618 Fibonacci retracement level at around $56,300, could invalidate the wedge breakdown setup, potentially triggering a rally towards the 0.382 Fibonacci line around $59,000, or a 5% rise from the current price level. This level aligns with BTC's 50-4H exponential moving average (50-4HEMA; red line).
Summary
Bitcoin has dipped to a one-month low amid recession fears, with Bitcoin ETF outflows intensifying. Meanwhile, technical analysis suggests Bitcoin may be undergoing an ascending wedge breakdown, which could lead to more volatility in the coming days. Investors should exercise caution, closely monitor economic data and technical indicators, and make investment decisions based on their risk tolerance.
Disclaimer: This material does not contain investment advice or recommendations. Every investment and trading operation involves risk, and readers should conduct their own research before making any decisions.
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