Key Points
- Bitcoin price has dropped 4% amidst global market anxiety due to the upcoming US jobs report.
- Other major cryptocurrencies, including Ethereum and Solana, are also experiencing losses.
Bitcoin’s price has shown instability this week, declining to nearly a one-month low as global markets move away from riskier assets. On Wednesday morning, the top cryptocurrency saw a drop of over 4%, trading around $56,700.
This downturn isn’t confined to Bitcoin. Other prominent cryptocurrencies are also under pressure. Ethereum, the second-largest digital asset by market capitalization, experienced a 5% drop over the past 24 hours, hovering around $2,400. Similarly, Solana also reported losses this week.
Market Retreat and Investor Concerns
The current downturn is part of a wider market retreat prompted by concerns about the global economic outlook. Investors are keenly observing the US payroll data due on Friday, which will provide insights into the Federal Reserve’s next course of action. This could potentially impact various markets, including cryptocurrencies.
In the options market, demand for protection against further Bitcoin price declines has noticeably increased. In a recent interview with Bloomberg, Sean McNulty, director of trading at liquidity provider Arbelos Markets, said traders are particularly keen on hedging against potential drops following the payrolls report and after the November presidential election.
“We’ve seen renewed downside buying interest in Bitcoin options, especially for post-payroll strikes at $55,000 and lower,” McNulty stated. He also noted that a significant position has been opened for options expiring on November 29 at a $35,000 strike price.
Signs of Market Caution
Further signs of market caution are seen in the decrease in open interest for Bitcoin futures on the CME Group Inc platform, which has fallen to its lowest level since May. Also, US Bitcoin exchange-traded funds (ETFs) have seen their longest five-day streak of net outflows since June. On Tuesday, these investment funds recorded a net outflow of $287 million.
Katie Stockton, a technical analyst at Fairlead Strategies LLC, recently changed her long-term outlook on Bitcoin to a “neutral bias.” She mentioned the increasing likelihood of a test of the $52,000 to $50,000 price range, a sentiment shared by Tony Sycamore, a market analyst at IG Australia Pty, who also warned of potential downside risks.
Despite this uncertainty, some investors see an opportunity. Rekt Capital, a renowned Bitcoin analyst, recently discussed the current market phase, explaining that Bitcoin is in a reaccumulation phase following its most recent halving.
Interestingly, the crypto market is 140 days after the halving. According to Rekt Capital, this phase usually precedes a major breakout, with the potential for a significant price surge as early as late September.
“We’re really getting close to that breakout point in late September, as the post-halving reaccumulation phase tends to precede the parabolic phase,” the analyst stated.
