- Summary:
- Crypto has become more mainstream with ETF approvals and declining volatility and here's why that spells trouble for Bitcoin price.
Bitcoin price extended its downside on Friday, touching the psychological support at the $55k mark. The pair traded at $55,774 at the time of writing, dragging the rest of the crypto market further down below the $2 trillion market cap mark and signaling a potential extension of bearishness over the weekend.
The crypto market has shown a closer correlation with the equities market in recent weeks, deviating from the cushioning it enjoyed from its volatility of yesteryears. This has predisposed it to the shocks of the stock markets to a greater degree than in the past. Furthermore, the approvals of Bitcoin and Ethereum ETFs this year mainstreamed the crypto market to a greater extent.
As things stand, Bitcoin price could extend or reverse its downward trajectory depending on Friday’s US Non-Farm Payrolls (NFP) data. The NFP numbers are the missing piece in the Federal Reserve’s jigsaw puzzle on how deep its mid-September interest rate cut will go. The debate generally is whether the Fed will announce a 25 or 50 basis points cut.
But the NFP data is a double-edged sword. While lower-than-expected NFP numbers could push the Fed to slash the rates by a larger margin, it could also raise panic about the health of the US economy and potentially resuscitate recession fears. That could precipitate recession fears that could result in a risk-off sentiment, affecting high-risk assets like Bitcoin and other cryptos.
Bitcoin price today
The $55k mark has served as a psychological support level for the better part of the year so far, and a sharper decline could be avoided if the price stays above that mark. Bitcoin price is approaching the lower Bollinger Band, which is currently at $55,176. A move below that mark will likely strengthen the downward momentum. In addition, the RSI reading is at 35, affirming bearish control.
The 30-minute chart favours the sellers below the 56,000 mark, with initial support likely to be at 55.515. However, if the bearish momentum extends, it could lead to further break the support to test 55,000. On the other hand, a move above 56,000 will strengthen the buyers to take control, with the first barrier likely to be at 56,400. Furthermore, a move past that level will invalidate the the downside narrative, and potentially result in additional gains to test 56,800.
