In September, both traditional and crypto markets experienced significant losses as macroeconomic conditions remained unfavourable. The overall market capitalization of the assets has declined, showing the market’s risk aversion following a surge in inflation numbers and rising interest rates in both the US and the EU. However, BTC outperformed both the S&P500 and the NASDAQ in September, which had negative returns of 9.34% and 10.5%, respectively. ETH was the weakest performer in September after the long-awaited Merge proved to be a ‘buy the rumour, sell the news event.
BTC trading volumes have increased in recent months versus certain FIAT currencies. For example, the BTC-GBP pair increased 233% in September after the reserve currency plummeted to an all-time low of £1.03 against the USD earlier in the month.
Several currencies throughout the world have seen their value fall against the USD as a result of growing inflation and weak macroeconomic conditions. GBP, AUD, JPY, TRY, and EUR have all dropped in value vs USD by 8.15%, 5.58%, 5.99%, 9.76%, and 6.61%, respectively, over the last three months. In the same time frame, the price of Bitcoin has climbed by 3.75%.
Uncertainty over the economic outlook and the Fed’s ability to avoid a hard landing has weighed on BTC and the Index. However, the Index has avoided a relapse to the sub-20/100 level, which has provided BTC price support. To support a shift in attitude, the Index must continue to avoid falling below 20/100. Markets will be influenced later today by US nonfarm payrolls and Fed discussion. According to the FedWatch Tool, the likelihood of a 75-basis-point rate hike is 75.9%, up from 53.2% on September 29.
Bitcoin (BTC) was still trading above $20,000, roughly flat from the previous day, as the largest cryptocurrency by market capitalization traded in a narrow range. BTC reached a high of $20,440 before falling back to current levels. Bitcoin dominance, a measure of BTC market cap compared to total cryptocurrency market cap, has risen to 41% following a 2022 low of 39% on September 10. The increase in BTC dominance reflects a shift in overall cryptocurrency investment to bitcoin. Let’s take a look at possible scenarios.
Bullish Case: Bitcoin (BTC) is still trading in the middle of a massive range on a daily time-frame chart, indicating that the coin is still accumulating momentum for a major move. If the price falls below $21,600.00, the resistance level of $24,200 may be tested in the coming days or weeks.
Bearish Case: The Friday jobs report is part of the macroeconomic narrative that has supported both traditional and digital asset valuations. The market appears to be in a “bad news = good news” loop. Increased job losses usually imply that the economy is in trouble and that inflation will decline. A better-than-expected jobs report may reinforce the perception that economic expansion should be moderated, putting negative pressure on bitcoin prices. If BTC breaks below the $18,600.00 price level then we might drop to the $16,500.00 price level.