As the cryptocurrency market continues to navigate uncertain waters, Bitcoin (BTC) has once again come under selling pressure in the lead-up to the release of key U.S. data. The latest development comes ahead of the scheduled release of the Institute for Supply Management (ISM) Manufacturing data on Tuesday, which is expected to provide valuable insights into the state of the U.S. economy.
A Potential Downturn Ahead?
According to one observer, a reading below 48 in the ISM Manufacturing data could lead to a deeper price drop in BTC. This commentary comes as the largest cryptocurrency by market value has been experiencing selling pressure during the European morning, reminiscent of the price swoon seen ahead of key U.S. data releases in recent months.
BTC Price Swoon: A Bull-Market Pullback?
On Monday, BTC fell nearly 3% to $63,600, breaching a bullish trendline that represented the rally from the Sept. 6 low of $52,600 to last week’s highs near $66,500, according to data from CoinDesk and TradingView. The slide appears to be a typical bull-market pullback following overbought conditions, according to 10x Research.
Overbought Conditions: A Warning Sign?
Markus Thielen, founder of 10x Research, noted that BTC has been experiencing heightened levels of the Greed & Fear index, which indicates overbought conditions. "In last week’s report, we briefly noted that BTC appears to be overbought in the short term," Thielen said in a note to clients.
A Familiar Pattern?
Thielen also pointed out that since June, the first week of the month – when U.S. ISM Manufacturing data is released – has been characterized by 10% price sell-offs. The latest decline is consistent with this pattern, which suggests that a pullback may be underway.
The Impact of ISM Data on BTC Price
The September report will be released on Tuesday and is expected to show that manufacturing activity continued to contract in the final month of the third quarter, according to FXStreet. The ISM Manufacturing New Orders data shows forward-looking indicators have fallen to near-recession levels.
Uncertainty Ahead?
Thielen warned that if the reading falls below 48.0, it could prompt another Bitcoin drop, while a higher number might fuel a rally. "This makes tomorrow’s data highly uncertain," Thielen said.
Fed Interest Rate Cut and China’s Stimulus Package: A Bullish Outlook?
Despite the uncertainty surrounding the ISM data release, optimism about the fourth quarter largely stems from expectations that the Federal Reserve will deliver another 50 basis-point cut in interest rates. Additionally, China’s recent big stimulus announcement has also contributed to the bullish outlook for the fourth quarter.
A Clue from Fed Chair Powell?
The market may get a clue of what the Fed plans to do later today as Fed Chair Powell is scheduled to speak on the economy at the National Association for Business Economics annual meeting in Tennessee. This speech could provide valuable insights into the Fed’s future monetary policy decisions.
Conclusion
As the cryptocurrency market continues to navigate uncertain waters, BTC has come under selling pressure ahead of the release of key U.S. data. While a reading below 48 in the ISM Manufacturing data could lead to a deeper price drop, optimism about the fourth quarter remains strong due to expectations of another Fed interest rate cut and China’s stimulus package. The market will be closely watching the speech by Fed Chair Powell later today for any clues on future monetary policy decisions.
Key Takeaways
- BTC has experienced selling pressure ahead of key U.S. data releases in recent months
- A reading below 48 in the ISM Manufacturing data could lead to a deeper price drop
- Optimism about the fourth quarter largely stems from expectations of another Fed interest rate cut and China’s stimulus package
- The market will be closely watching the speech by Fed Chair Powell later today for any clues on future monetary policy decisions
