Major Cryptocurrencies Plunge After US Stock Market Decline
Major cryptocurrencies plummeted after major US stock indices closed significantly lower on Tuesday. The drop was led by Nvidia (NVDA) and other chipmaker stocks, as September began with weaker-than-expected performance following a strong finish in August.
As a result, cryptocurrency markets also retreated, with significant cryptocurrencies like Bitcoin (BTC), Ethereum (ETH), Solana (SOL), Polkadot (DOT), and others experiencing notable declines.
BTC fell nearly 5% in the last 24 hours, while ETH dropped nearly 6%, sinking below the critical $2,400 level. SOL also fell almost 6%, dropping below $130, while DOT barely stayed above $4.
Bitcoin (BTC) Losing Traction
Bitcoin (BTC) dropped to a low of $55,676 before climbing back above $56,000, as cryptocurrency markets fell following the drop in traditional stock markets. The world’s largest cryptocurrency has lost significant ground, having retreated nearly 5% in the last 24 hours and may struggle to return to $60,000. Traders attribute the decline to the broader macroeconomic environment, but other factors are also at play.
One trader explained that concerns about a recession in the US have impacted BTC.
However, with the trend stabilizing and the focus shifting to monetary policy and the performance of the US dollar, the bullish narrative for BTC will depend on expectations for a more dovish Federal Reserve policy, such as interest rate cuts. This means traders anticipate that the US will be forced to implement expansionary measures to stimulate the economy.
“The bottom for #Bitcoin may have been reached. There’s a new bullish narrative for Bitcoin based on the looser Federal Reserve policy and global macroeconomic trends. After a downturn in early August, expectations for looser Fed monetary policy, such as interest rate cuts, have boosted optimism for #Bitcoin. This shift in sentiment signals a ‘tactical bottom’ for Bitcoin, possibly marking the beginning of a new upward trend. $BTC is now less influenced by concerns about a US recession and more by monetary policy and the performance of the US dollar.”
The upcoming US jobs report, scheduled for September 6, could also have a significant impact. Economists at Morgan Stanley expect that the US added 185,000 new jobs in August, a number sufficient to support a 0.25% interest rate cut. However, skepticism among traditional investors remains, evident when Nvidia, which reported earnings exceeding market expectations, saw a 6% drop in the next session.
Spotting Bitcoin ETF Outflows and Miner Profitability Decline
Another reason behind the lagging price and pessimism for BTC is the significant outflows observed from Bitcoin spot ETFs. As these funds fail to attract inflows and experience substantial outflows, they are at the brink of receiving major negative attention. Between August 27 and August 30, Bitcoin spot ETFs recorded net outflows of $480 million, erasing the $455 million inflows received in the previous two days. While this might be seen as normal, it could create doubts among traders about future BTC price movements.
Bitcoin investors are also concerned that miner profitability, which is near all-time lows, could trigger a sell-off. Miners currently hold over 1.8 million BTC, a number that has remained unchanged for the past two months, causing investor concern. This worry is compounded by the recent drop in the Bitcoin hash rate index, which has fallen from $48 per PH to $42 per PH per day.
Breakout or Breakdown?
So, is BTC heading towards a breakout or a breakdown? Analysts have identified three key events that could drive BTC prices higher and potentially break the downward trend of recent months. According to Mena Theodorou, co-founder of Coinstash, the next significant BTC price action will depend on how the market responds to upcoming US policy and regulatory changes and forthcoming macroeconomic data.
“Whether it’s a breakout or a breakdown will likely depend on the next significant news or market change […] for now, the market seems to be in a ‘wait and see’ mode.”
Josh Gilbert, market analyst at eToro, expressed anticipation for the upcoming Federal Open Market Committee meeting on September 18, which could act as a significant catalyst for BTC. Most analysts expect Federal Reserve Chairman Jerome Powell to cut rates by up to 0.525%, which could significantly boost risk assets like Bitcoin.
“The crux of the matter is that a rate cut is coming, but the focus is now on the size of that cut. US jobs data this week will be a key driver of expectations and could lead to a move in cryptocurrency assets.”
Ting Wang, CEO of Cointash, also noted that investors should pay attention to the upcoming US employment data, which is set to be released on Friday.
“The July unemployment rate was higher than expected, raising concerns about a possible recession. The unemployment rate is known to be a double-edged sword. On the one hand, a higher-than-expected rate could signal a greater chance of recession, which isn’t great news. On the other hand, it could actually be positive for the market, as it might give the Fed more reasons to cut rates.”
Bitcoin (BTC) Price Analysis
Bitcoin (BTC) experienced a significant drop early in the session, falling to a low of $55,663 before buyers pushed the price back above $56,000. However, with markets in the red, BTC faces significant selling pressure and may struggle to recover previous support levels unless a major catalyst pushes the price higher. As seen on the price chart, BTC has mainly been in the red since the weekend. Sellers attempted to drag the price below $58,000 on Friday, as it fell to a daily low of $57,733. However, buyers could face the selling pressure and push BTC back above $59,000.
Source : TradingView
BTC recorded a marginal decline on Saturday before dropping nearly 3% on Sunday, ending the weekend at $57,399. However, BTC found support around the $57,000 price level and rebounded on Monday, marking an increase of just over 3% to settle at $59,169. On Tuesday, buyers attempted a move above the 20-day SMA and the $60,000 price level. However, BTC was rejected from these levels due to strong selling pressure. As a result, sellers took over, reducing BTC by 2.77% to $57,529. With global markets erasing trillions of dollars, BTC also saw a significant drop during the ongoing session, falling below $57,000 and reaching a low of $55,663. The cryptocurrency is currently trading around the $56,500 price level, down nearly 2%.
Bears will look to continue their market squeeze and drive BTC below $55,000, the next support level. Meanwhile, buyers will attempt to gain momentum and reclaim $57,000 before any further moves. BTC needs to surpass the $60,000 and $65,000 levels for a proper sentiment reversal. This would indicate that bears are losing their grip and bulls are gaining the upper hand. If BTC breaks above these levels, it faces a resistance cluster between $70,000 and $74,000.
Ethereum (ETH) Price Analysis
Ethereum (ETH) has fallen below the $2,400 threshold and could be poised for a significant decline if the price closes below $2,300. ETH struggled throughout August, with a bearish sentiment plaguing the asset. This trend continued into September, as ETH starts the month with a decline, with negative sentiment potentially intensifying if the current price action persists. ETH was trading between $2,400 and $2,600 as it struggled to break above the 20-day SMA.
Source : TradingView
The world’s second-largest cryptocurrency ended the weekend in the red, marking a 3.44% decline and settling at $2,428. With the $2,400 support level holding, ETH rebounded on Monday, rising 4.55% to surpass $2,500 and settle at $2,529. However, buyers lost momentum as demand waned closer to $2,600, allowing sellers to take over on Tuesday. As a result, ETH dropped 4.49% on Tuesday, falling below $2,500 to $2,425. Sellers continue to control the market during the current session, driving ETH to a low of $2,310. However, buyers have pushed back, with ETH reaching $2,389, as it seems to be reclaiming the critical $2,400 level.
If ETH closes below $2,300, it could decline further to $2,200 or even $2,100. This is why it is crucial for buyers to reclaim $2,400. However, sentiment around ETH is significantly bearish, with the MACD currently showing a downward trend and the RSI trading below the neutral level of 50.
Solana (SOL) Price Analysis
Solana (SOL) is attempting to regain the $130 price level after falling below it on Tuesday, as sellers continue to exert influence on the asset’s price. SOL’s recent bearish trend saw the altcoin drop over 13% last week. As seen on the price chart, SOL has struggled to break a downward trend since being rejected at $160, with the price falling below moving averages towards the end of August, signaling an intensification of the bearish sentiment.
Source : TradingView
By the end of August, SOL had fallen below $140, settling at $135. Those hoping for a positive start to September were disappointed as SOL continued to decline, dropping just over 5% to start September below $130, settling at $128. Despite the bearish sentiment, SOL began the current week with a positive trend, recovering from its lows to rise 4.98% and push back above $130, settling at $135. Once again, sellers prevented further price increases as SOL fell 5.47% on Tuesday to drop below $130 and settle at $127. Sellers tried to break through the $120 level during the current trading session, with SOL falling to a low of $122. However, buyers withstood the selling pressure at lower levels, defeating the bears and pushing SOL back above $130. Currently, SOL has risen nearly 3% and is trading at $131.
SOL has strong demand at the $120 price level, which buyers are expected to defend vigorously to prevent further declines. To change sentiment, SOL needs to close above $130. Doing so would set it up for a push towards $140. A successful push above this zone could drive SOL to $150.
Fantom (FTM) Price Analysis
Fantom (FTM) closed August on a bearish note, falling below the 50-day SMA after failing to stay above $0.50. Buyers attempted a recovery after FTM dropped to $0.42 on August 28, but could not generate momentum. As a result, FTM was unable to make significant price moves and closed August at $0.42. The month began with intensified selling pressure as FTM fell nearly 5% on Sunday, dropping below $0.40. The price quickly recovered on Monday, rising nearly 6% to return to $0.42.
Source : TradingView
However, with intense selling pressure at higher levels and the 20-day and 50-day SMAs acting as resistance, FTM fell nearly 9% on Tuesday. The current session sees FTM marginally down as sellers attempt to extend their influence and push the price even lower. The RSI for FTM is just below 50, near neutral, but shows a bearish trend. However, sentiment around FTM could shift as Fantom prepares for the launch of its Sonic testnet, which is set to release next week. Sonic is Fantom’s most ambitious upgrade to date, promising significant improvements in speed and scalability, along with a range of new features.
Bittensor (TAO) Price Analysis
Bittensor (TAO) has fallen nearly 8% in the last 24 hours and a staggering 18% over the past week, as top AI tokens have faced severe declines. The dramatic drop can be attributed to chip giant Nvidia, which experienced a sharp decline on September 4, with its stock plummeting nearly 10%, leading to a shocking $270 billion drop in the company’s market capitalization. This marked the largest market capitalization drop for an American company in history. After it was revealed that the U.S. Department of Justice had subpoenaed Nvidia, the company’s stock continued to decline during after-hours trading.
Source : TradingView
After the news, tokens such as AKT, FET, RNDR, and TAO experienced double-digit declines before recovering some losses. TAO, which had already struggled in recent weeks, started the month with a drop of nearly 6%, dragging its price down to $264. However, it quickly rebounded on Monday, rising over 6% to settle at $280. The price fell on Tuesday, dropping more than 11% to fall below $250 and settle at $248. Sellers dragged TAO to a low of $240 during the current session, but the price has since recovered some of its losses and is currently trading at $255, up nearly 3%.
Celestia (TIA) Price Analysis
Celestia (TIA) struggles to stay above its support level as a lack of buying activity continues to hinder momentum for the bulls. TIA has been in a downtrend since it failed to push above $6.05 on August 24, losing several key support levels as its price declined. By the end of August, TIA had dropped below $5 and was trading at $4.49. Last month saw a nearly 20% drop in TIA. The new month has seen the bearish trend persist, with TIA falling nearly 6% on Sunday to settle at $4.24.
Source : TradingView
The price recovered on Monday, rising by 5.71% to settle at $4.47. However, buyers were unable to surpass $4.50, and sellers took control on Tuesday, causing TIA to fall by over 9% to $4.06. Once again, TIA’s support held, and buyers might push the price back from its low of $3.88 to its current $4.19, an increase of just over 3%. TIA has strong support at $4, which could prevent further price declines. Buyers need to reclaim the $4.50 level to reverse sentiment and push towards $5, where a downward-sloping 20-day SMA acts as resistance.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
