Bitcoin (BTC) continued its downward trend on Sept. 11, with prices falling below $56,000 despite positive U.S. inflation data. As Wall Street opened, BTC/USD recorded losses of over 3%, marking a significant decline in the crypto market.

CPI Data Fails to Lift Bitcoin

The U.S. Consumer Price Index (CPI) for August, which tracks inflation, showed a 0.2% month-on-month increase and a 2.5% rise year-on-year. This is the smallest 12-month inflation rise since February 2021, easing fears of rising inflation. However, the data failed to inspire confidence among Bitcoin traders, as the price continued to decline, slipping below $56,000.

BTC/USD 1-hour chart. Source: TradingView

The CME Group’s FedWatch Tool reflected expectations for a 0.25% interest rate cut at the Federal Reserve’s Sept. 18 meeting. Despite the increased likelihood of a rate reduction, Bitcoin traders appeared cautious, with popular trader Roman predicting a retest of $55,000.

On-Chain Data Signals Risk-Averse Sentiment

On-chain analytics platform CryptoQuant highlighted that Bitcoin has decoupled from gold, which reached a new all-time high in dollar terms during August. This decoupling typically signals a risk-averse environment, where investors shift to traditional safe-haven assets like gold, while Bitcoin mirrors stock market movements and declines.

US CPI 12-month % change. Source: Bureau of Labor Statistics

CryptoQuant’s report further noted that the weakening of both the U.S. dollar and Bitcoin could indicate broader financial uncertainty. In such periods, investors often flee from riskier assets like Bitcoin and the dollar in favor of more secure options.

Market Outlook

Despite the recent losses, longer-term Bitcoin traders remain cautiously optimistic. Some experts suggest that BTC/USD is still holding support on weekly charts, offering hope for a recovery. However, the overall market sentiment remains uncertain as Bitcoin continues to struggle amid broader financial stress.

Bitcoin has seen a significant drop in value, falling 8% between Sept. 4 and Sept. 6, as it broke below the $54,000 mark for the first time in over a month. The price drop was exacerbated by weaker-than-expected US labor market data, though market negativity had already been growing due to ongoing outflows from spot Bitcoin ETFs.

Impact of US labor data and tech bubble fears

Weaker US nonfarm payroll data has raised concerns about the Federal Reserve’s approach to interest rates. Market analysts suggest that the labor market’s softening could push the Fed to take action to mitigate risks, though there is no consensus on whether this will lead to a broader stock market correction. The S&P 500 is on track for a significant weekly drop, driven by losses in the tech sector.

S&P 500 (left) vs. Bitcoin/USD (right). Source: TradingView

Market experts are divided on how this could affect Bitcoin. Some believe the slowing labor market could prompt the Fed to lower rates, which may benefit Bitcoin in the long term. However, short-term uncertainty remains, with fears of a tech bubble and concerns about institutional investors becoming more cautious.

Regulatory concerns and miner sell-off fears add to market pressure

Regulatory issues are also weighing on Bitcoin. A recent ruling in a class action lawsuit against Coinbase, alleging that the exchange misled investors, has reduced confidence in the cryptocurrency market. Additionally, Bitcoin miners may face pressure to sell off their holdings, further contributing to the downward trend.

Bitcoin miners’ net position change, BTC. Source: Glassnode

Overall, the combination of macroeconomic factors, regulatory challenges, and potential miner sell-offs are driving the current bearish sentiment surrounding Bitcoin.

Bitcoin faced a turbulent day on Sept. 6, plunging to a new one-month low after briefly spiking in response to the latest US employment data. The price of Bitcoin initially surged towards $57,000 before sharply reversing, reaching a low of $54,919 on Bitstamp.

Bitcoin’s Price Volatility Amid Jobs Data

The latest US nonfarm payroll data for August revealed weaker-than-expected job growth, intensifying concerns over the strength of the labor market. In reaction, Bitcoin’s price fluctuated, confusing traders with its erratic movements. After a brief rally, BTC fell below the $55,000 mark, signaling increased uncertainty in the market.

BTC/USD 1-hour chart. Source: TradingView

At the same time, calls for interest rate cuts gained momentum. New York Federal Reserve President John Williams suggested that with inflation stabilizing, it was time to reduce the restrictive stance on monetary policy. The decision on a possible rate cut is expected during the Federal Reserve’s meeting on Sept. 18.

Market Split on Rate Cut Prospects

Following the jobs data release, CME Group’s FedWatch Tool indicated a near-even split in market expectations. Traders are now pricing in a 53% chance of a 25-basis-point rate cut and a 47% chance of a 50-basis-point cut.

US dollar index (DXY) 1-hour chart. Source: TradingView

The US dollar index (DXY) also saw a boost, jumping 0.3% after the data release. However, popular trader Daan Crypto Trades remains bearish on the dollar’s long-term outlook, predicting a drop below the 101 support level, which could benefit risk assets like Bitcoin.

Bulls Struggle as Bitcoin Faces Resistance

Despite short-term gains, Bitcoin continues to face resistance. Analyst Rekt Capital highlighted a developing bullish divergence on 4-hour timeframes, as the price remains trapped in a downtrending channel. Repeated rejections off key resistance levels have frustrated bullish traders, with further price action likely to depend on the ability to break above these barriers.

As uncertainty lingers, the battle between bulls and bears continues, leaving the market in a state of flux heading into September.

Despite September’s historical reputation as a challenging month for Bitcoin, some traders and analysts remain hopeful that the cryptocurrency could close the month on a strong note. Tyr Capital’s Chief Investment Officer, Ed Hindi, believes that Bitcoin is more likely to finish September above $60,000 than below it.

“Although September is historically a negative month for BTC, a combination of a Federal Reserve rate cut and a relatively robust US economy could surprise the bears.”

He added that the chances of Bitcoin closing the month above $60,000 are higher than the chances of it falling below that level.

At the time of publication, Bitcoin was trading at $56,633, according to CoinMarketCap data, having remained below $60,000 since August 30. While some traders do not expect a near-term move back to $60,000, such a recovery could result in the liquidation of over $584 million in short positions, according to CoinGlass data.

Bitcoin is down 0.85% over the past 30 days. Source: CoinMarketCap

Meanwhile, crypto trader Daan Crypto Trades pointed out that despite Bitcoin’s typical September slump, the average return of -4% is not as severe as many might perceive. CoinGlass data shows that September has historically been the worst month for Bitcoin, with average losses of 4.49%.

September has had the most Bitcoin red months since 2013. Source: CoinGlass

Daan Crypto Trades is currently focusing on Bitcoin’s longer-term price action, particularly looking for a “higher high and higher low,” which signals that buyers are dominating the market. He explained, “I’m mostly watching for price to flip its market structure to bullish.” For him, Bitcoin needs to trade above $65,000 to demonstrate strength.

This view aligns with that of crypto analyst Matthew Hyland, who stressed the importance of Bitcoin bouncing back above key levels to confirm the uptrend that began in August.

While uncertainty lingers, many industry experts suggest that Bitcoin could deliver a surprise to those expecting a typical September downturn.

Bitcoin continues to struggle, failing to halt its recent decline, as traders brace for the impact of upcoming US jobs data. On September 5, Bitcoin briefly touched $57,000 during the Wall Street open, but the relief was short-lived, with BTC/USD down 2.3% on the day.

US Jobs Data Fuels Interest Rate Cut Speculation

Macroeconomic data, including a miss in private-sector payrolls, reinforced expectations for an interest rate cut by the US Federal Reserve. Payrolls rose by just 99,000, significantly below the anticipated 144,000, marking the smallest gain since 2021. Market commentators on X expressed concerns over the weakening labor market, with traders now closely watching the Fed’s upcoming meeting on September 18.

BTC/USD 1-hr candle chart. Source: TradingView

Adding to the uncertainty, the Job Openings and Labor Turnover Survey revealed a drop to 7.67 million job openings, lower than the expected 8.1 million. Analysts believe that as the Fed focuses more on employment, the rest of this week’s data will play a crucial role in determining the scale of potential rate cuts.

Bitcoin Faces “Double Bottom” Risk

As traders await further unemployment data on September 6, Bitcoin faces potential downside risk. Keith Alan, co-founder of Material Indicators, highlighted the possibility of BTC retesting the August lows of $49,500, forming a “double bottom” pattern. This move could act as a key backtest for Bitcoin’s broader uptrend.

Fed target rate probabilities. Source: CME Group

A significant support level to watch is the 50-week simple moving average (SMA), currently at $53,355. Popular trader CrypNuevo speculated that Bitcoin could see a relief bounce above $60,000 if upcoming labor market data provides a boost. However, with liquidations gathering between $60,000 and $60,200, the path remains uncertain.

As markets await the next Federal Open Market Committee (FOMC) meeting, the upcoming data releases will likely set the tone for Bitcoin’s next move.

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.

Bitcoin’s price action has remained uncertain as a crucial metric, active addresses, continues to decline. Analysts suggest that the drop is largely due to institutional investors increasingly holding onto their assets, creating less network activity.

The number of active Bitcoin addresses, a measure of user engagement on the network, has significantly decreased since the beginning of 2024. Historically, such a decline has only occurred after Bitcoin’s price peaks, as seen in the 2017 and 2021 bull cycles. However, this time, Bitcoin’s price has been moving sideways without a clear direction.

At the time of writing, Bitcoin traded at $56,666, marking its lowest level since mid-August. CryptoQuant analyst “Avocado on-chain” observed that many Bitcoin holders seem to have shifted their focus to long-term investments, locking up their assets in cold wallets. This change in behaviour has contributed to the sharp drop in active wallet activity.

Avocado onchain said that if active addresses bounce back, Bitcoin’s price will likely follow. Source: CryptoQuant

Swyftx lead analyst Pav Hundal noted that institutional investors are holding their Bitcoin in secure wallets, further reducing on-chain activity. He emphasized that since the launch of Bitcoin ETFs in January, wallet movement data has become less relevant in understanding market trends.

Prominent Bitcoin advocate Timothy Peterson described the drop in active addresses as “completely anemic,” raising questions about the future of Bitcoin’s network engagement. Meanwhile, 10x Research pointed out that Bitcoin’s market behavior does not always follow a predictable cycle, often experiencing rapid price surges when demand shifts unexpectedly.

Despite the decline in active addresses, analyst Will Clemente highlighted that Bitcoin’s peak compound annual growth rate (CAGR) may be behind us, but investors could still see significant returns with the right investment strategy. While Bitcoin’s short-term future remains uncertain, long-term holders and institutional investors are reshaping the landscape.

Bitcoin’s price action is putting new investors to the test, echoing patterns seen before its previous all-time high in 2020. Onchain analytics platform CryptoQuant highlighted in a recent blog post that short-term holders are now in a similar situation to those in mid-2019.

Bitcoin Investors at a Crossroads

Bitcoin buyers who entered the market at its March highs have been wrestling with sideways price movement ever since. According to CryptoQuant analyst Avocado_onchain, a spike in unspent transaction outputs (UTXOs) from investors who bought in within the past six months suggests many of these new entrants are either holding firm or selling at a loss.

Bitcoin realized cap UTXO age bands chart. Source: CryptoQuant

“These are new investors who entered the market, likely around March of this year when Bitcoin’s price peaked at $73,800,” the analysis noted. A decrease in these UTXOs indicates that some of these investors have exited the market due to Bitcoin’s stagnant price, while others have transitioned into long-term holders.

The situation bears resemblance to the market conditions in 2019 when Bitcoin reached a local high but took nearly 500 days to surpass its previous all-time peak of $20,000 set in 2017.

New Investors Key to Bitcoin’s Future Gains

Unlike traditional “short-term holders,” who typically hold Bitcoin for up to 155 days, these new investors are seen as critical to driving future price gains. Historically, new capital from fresh investors has been crucial in fueling Bitcoin bull markets. However, the current landscape suggests cautious optimism is necessary.

“Bitcoin’s price has been stuck in a broad range for more than six months without a clear breakout trigger,” Avocado_onchain observed. While the long-term outlook remains positive, the analyst urged caution in the short term, emphasizing the need to watch for signs of new investor capital.

As Bitcoin hovers near long-term production cost levels for miners, the market appears to be waiting for the next big move. Whether new investors will fuel another rally remains to be seen.

Bitcoin (BTC) suffered a notable decline of 8.6% in August, with the cryptocurrency starting on a weak note in September. The price fell below $58,531 on September 1, marking a more than 2% drop on the first day of the month. This decline was exacerbated by a poor monthly close, leaving bulls struggling to stem further losses.

September’s Historical Weakness for Bitcoin

BTC price data from TradingView revealed that Bitcoin reached a low of $57,230 on Bitstamp, a level not seen since August 16. The typically thin trading volumes during the weekend contributed to the downward pressure, culminating in an August finish that underperformed its average gain of 1.75%. Historically, September has been unfavorable for Bitcoin, with average losses of 4.5%, a trend that appears to be continuing this year.

BTC/USD 1-hour chart. Source: TradingView

Market Predictions and Liquidity Concerns

Trader Crypto Chase indicated potential trouble ahead, stating that if Bitcoin fails to hold between $55,500 and $56,500, it could fall to around $51,000. Meanwhile, fellow trader Exitpump observed aggressive short selling at local lows as the weekly close approached.

BTC/USD monthly returns (screenshot). Source: CoinGlass

Rekt Capital noted that Bitcoin is currently testing the “Channel Bottom” on the weekly chart. For a positive outlook, Bitcoin would need to close the week above $58,450 to confirm this level as support.

Short Squeeze and Liquidity Hunts

Liquidity data from CoinGlass highlights the ongoing bearish sentiment, with Bitcoin slicing through multiple support levels in its recent decline. Trader CrypNuevo suggested that both upside and downside liquidity hunts could be in play this week. He recommended waiting for a potential drop to $56,600, where he plans to place a long order in anticipation of a price rebound. CrypNuevo also targets $61,300 for a potential upside liquidity grab.

Bitcoin (BTC) hashprice is currently at its lowest level since the March 2020 crash, potentially marking a significant buying opportunity, according to recent insights from on-chain analytics platform CryptoQuant.

Bitcoin Nearing a Bottom?

CryptoQuant’s latest analysis suggests that BTC price action may be near long-term lows, as miners continue to face profitability challenges post-halving. Hashprice, which measures the cost per terahash for miners, is at a conspicuously low level, reminiscent of conditions seen before previous major price surges.

BTC/USD vs. Bitcoin hashprice (screenshot). Source: CryptoQuant

The report notes that historically, low hashprice periods have often coincided with Bitcoin price bottoms, hinting that the current slump may signal another potential upward breakout.

“The highlighted sections in the chart indicate periods where the hashprice dropped to lower levels, corresponding to times when Bitcoin prices were also at or near their lowest points,” explained CryptoQuant contributor Woo Mink-yu. “This suggests that the current low hashprice might indicate that Bitcoin’s price is near a bottom as well.”

Miners Return to Accumulation

Despite ongoing profitability struggles, Bitcoin miners appear to be accumulating rather than selling their BTC reserves. Recent data confirms that miners’ collective Bitcoin holdings have increased, reaching 1,815,832 BTC.

Bitcoin miner wallet reserves. Source: CryptoQuant

This accumulation follows a brief period of miner outflows in July and indicates growing confidence among miners in the long-term price outlook for Bitcoin.

Mining Difficulty Near All-Time Highs

Bitcoin’s mining difficulty has also increased by 3% this week, bringing it close to its all-time high of 90.66 trillion, according to monitoring resource BTC.com. The rise in difficulty highlights the continued strength and resilience of the Bitcoin network, despite the current hashprice challenges.

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CryptoQuant CEO Ki Young Ju emphasized that the U.S. mining sector appears to be stabilizing, with costs around $43,000 per BTC. He noted that unless prices drop below this level, hash rates are likely to remain stable.