Crypto’s step back for acceleration

Market picture

The cryptocurrency market starts the week on the defensive, losing 1.2% of its capitalisation in 24 hours to $2.27 trillion, although it is still up 3% from a week ago. This drawdown looks like short-term profit-taking from the recent wave of gains amid the risks of the upcoming jobs report and Powell’s comments.

The first cryptocurrency is down 2.6% on Monday, retreating to $64.0K. On the technical side, bitcoin has come under pressure near the upper border of a multi-month downtrend. However, we see this as having more of an emotional component, as we believe that the break above the previous highs and the 200-day moving average served as an important signal of bullish dominance.

Bitcoin is on the verge of its best September since 2012. BTC has gained more than 11% since the beginning of the month, in stark contrast to the typical decline this month. The altcoin index is up more than 20% after easing financial conditions amid a global wave of interest rate cuts by the Fed, ECB and PBC.

Bitcoin closed higher for the third week, hitting its highest level since late July on Friday at around $66,500. The positive momentum in US spot bitcoin ETFs continued through all five trading sessions of the week.

News background

10x Research believes that the current pullback in the first cryptocurrency is a typical correction due to its overbought nature. Since June, BTC has always corrected lower in the first week of the month.

According to DecenTrader, if BTC holds a key support level of around $63K, the first cryptocurrency has a chance to start a bullish rally. Bitcoin’s long-to-short ratio is now at an extremely low level, which has always preceded the asset’s growth.

Michaël van de Poppe, founder of MN Trading, believes that the current market situation for Bitcoin is as favourable as it can be due to the weakening US labour market and growing distrust in traditional financial institutions. According to his forecast, BTC will rise to $192K by the end of the year and $600K next year.

FalconX predicts that by mid-2025, the Fed’s benchmark interest rate will be below the return on Ethereum, driving up the price of the second most-capitalised cryptocurrency.

The Dutch Financial Markets Authority (AFM) has warned of the risks of investing in cryptocurrencies, expressing fears that users could fall victim to market manipulation and lose investments in pump-and-dump schemes.