Crypto market turbulence was very visible in August as US macroeconomic trends shaped investors sentiment, but will rebound come in September?
The crypto market saw its most intense drawdown this year in the third quarter. Bitcoin (BTC), the industry’s flagship asset, saw its price drop as low as $52,598.70. BTC fell by more than 8% for August, extending a bearish trend into September.
While the outlook for Bitcoin is bearish, many altcoins have not fared better either. Ethereum (ETH), for instance, fell to a low of $2,150.86, atop a 7.67% slump in the past 30 days. With the market outlook bearish, whether this trend will continue this month remains to be seen.
There are indices to judge whether a rebound is ahead. However, the crypto market’s correlation with the US Stock market might stir a major headwind to watch.
Crypto Market and Macroeconomic Influences
As a subset of the broader financial market, the crypto market is generally impacted by trends on Wall Street. In August, the uncertainties surrounding the Federal Reserve interest rate cut shaped market trends.
This discussion stemmed from cooler inflation readings in the United States. Per an earlier report, US PCE inflation came in at 2.5% in July, unchanged from the previous month’s figure and down from market expectations. Besides the PCE data, other performance metrics, like US jobs data, also confirmed improvement in the economy.
Drawing on this trends, Chairman Jerome Powell noted it is time for a trend shift. Referring to interest rate cut, he, however, said the Feds will make this move based on sustained positive market data. Since he uttered this statement weeks ago, Analysts have postulated that the first rate cut will come this month.
Cutting interest rate is a positive shift for investors and by default, the broader crypto market. If this rate cut is implemented, investors gain access to more capital, freeing up cash in the economy. The resultant flooding of the economy with US Dollar is the ultimate catch for hedges like Bitcoin. With more cash in circulation, the purchasing power of USD is reduced, making BTC and altcoins more attractive.
The uncertainties around this macroeconomic pivot has continued to rattle the market, but this may change soon.
Relying on Internal Catalysts
Different altcoins have unique fundamentals capable of triggering their price rebounds. Cardano launched Chang hard fork on mainnet earlier this month in push toward decentralized governance. Despite this important milestone, a recent ADA price analysis confirmed the coin is locked in a bearish wedge. Breakout from this trend is largely dependent on how Bitcoin moves this month.
With so many crypto market trend hinging on Bitcoin, a defined trigger is required. This might come from the spot Bitcoin and Ethereum ETF products in the US. Though the spot Bitcoin ETF outflow in recent times has dampened sentiment, a reversal might come soon.
As of writing, the price of Bitcoin has rebounded to $54,704, up by 1.2% in 24 hours. Its lowest price in 24 hours was $52,598.70 and it soared to a high of $54,757.45. With this mild uptick, there are signs BTC correction is over for now as a potential bottom is in.
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