Bitcoin’s price fell sharply today, dropping by 3.30% to around $55,600, its lowest point in a month. This decline mirrors broader losses across global risk markets, with traders concerned about the potential for a recession. As a result, investors are moving away from riskier assets, including cryptocurrencies and stocks, as they await crucial economic data that could influence future Federal Reserve policies.
Recession Risks Pressure Global Markets
The recent market downturn comes amid growing concerns that the U.S. economy may be heading for a slowdown. Economic indicators, such as declining manufacturing activity and a cooling labor market, have raised fears about a potential recession. This uncertainty is weighing on both traditional markets, like the S&P 500, and cryptocurrencies such as Bitcoin.
BTC/USD versus S&P 500 futures year-to-date performance. Source: TradingView
Bitcoin ETF Outflows Reach New Highs
Adding to Bitcoin’s woes is the significant outflow of funds from Bitcoin exchange-traded funds (ETFs). On Sept. 4, $287.80 million flowed out of Bitcoin ETFs, marking the longest streak of outflows since June. This de-risking trend indicates that investors are becoming increasingly cautious, especially as they brace for potential market volatility.
Bitcoin Futures Data Reflects Caution
Further signs of caution are evident in Bitcoin’s futures market. Open interest (OI) in Bitcoin futures has fallen from a peak of $37.50 billion in July to around $30 billion on Sept. 4, suggesting that traders are reducing their exposure. Additionally, funding rates in Bitcoin futures have seen a sharp decline, indicating that fewer traders are betting on short-term price increases.
Bitcoin ETFs daily net flows. Source: Glassnode
Technical Breakdown Points to Further Losses
Bitcoin’s recent price action appears to be part of a breakdown stage in a rising wedge pattern, a technical indicator that suggests further downside risk. If this pattern plays out, Bitcoin could drop to around $54,000 in September. However, a rebound from its current support level at $56,300 could trigger a rally towards $59,000, a key resistance level.
