On the 3rd of September, Bitcoin dropped below $58,000, marking the fourth time in the past week that it fell below this significant level on the BTC/USDT 4-hour chart.
The downward movement can be attributed to a lackluster performance in August, with Bitcoin losing 8.6% according to Coinglass data, wiping out the modest gains from July.
Early on Wednesday, the 4th of September, the leading cryptocurrency continued to decline, reaching a low of $55,673 on Binance, following steep losses in U.S. and Asian equity markets.
“Several major stocks have collectively lost $550 billion in market capitalization today. Nvidia, $NVDA, is set to post its largest daily decline since April 2024,” stated Kobeissi Letter’s market commentary.
Simultaneously, the overall cryptocurrency market capitalization dropped below $2 trillion during this slump, marking the first time since the 4th of August.
The broader market downturn has been linked to remarks from the Bank of Japan (BoJ) Governor suggesting further interest rate hikes, reigniting concerns about the global economy’s well-being.
Strikingly Similar Decline Across Crypto Markets
The recent sell-off in both crypto and stock markets mirrors the global market crash at the beginning of August, triggered by similar apprehensions following the BoJ’s increase in the benchmark borrowing cost in late July.
Interestingly, despite the market downturn, the Crypto Fear & Greed Index rose to 27 today after remaining stagnant at 26 points in the first few days of the month.
Although September typically records the worst performance for Bitcoin, with an average decline of 4.5%, traders are still optimistic about a possible resurgence in trading volatility.
Macro Volatility: BoJ and Federal Reserve Interest Rate Policies
This month’s release of U.S. economic data, starting with the August nonfarm payrolls on the 6th of September, could either support or undermine the current narrative of a slowing U.S. economy.
The NFP report from July revealed an uptick in the U.S. unemployment rate from 4.1% to 4.3%, creating downward pressure on global markets.
Outside the U.S., the Bank of Japan’s policy decisions are significant to monitor. The BoJ’s decision to increase interest rates in late July, coupled with a disappointing U.S. jobs report for July, raised concerns about the Fed’s pace of rate cuts and its impact on risk assets at the start of August.
In his speech on the U.S. economic outlook on the 23rd of August, the Federal Reserve Chair indicated a need for policy adjustments.
Expectations point to a 25-basis point cut at the next Federal Open Market Committee (FOMC) meeting on the 18th of September. A move aligned with this forecast could create a favorable monetary environment for riskier assets like cryptocurrencies.
However, a weak August U.S. jobs report might prompt an aggressive 50-basis point cut, raising recession concerns and causing a market correction.
Alternatively, a strong report could sway the Fed’s decision on cutting rates, but both scenarios imply potential volatility in the market.