The Market Fell Again, has it Reached the Bearish Limit?

2024-09-11, 07:30

[//]:content-type-MARKDOWN-DONOT-DELETE
![](https://gimg2.gateimg.com/image/article/17260389411692587449analysis.jpeg)
## [TL；DR]: 
Since late August, the <a href="/price" target="_blank" class="blog_inner_link">crypto market</a> has remained weak, with <a href="/price/bitcoin-btc" target="_blank" class="blog_inner_link">Bitcoin</a> breaking through the psychological barrier of $54,000 last week. In the past month, the crypto market has been in a state of fear for 26 days, highlighting the fragility of the current market.

The recent weak trend in the crypto market is intertwined with multiple complex factors, but the concern of a US economic recession is undoubtedly the macroeconomic pressure that the market is most concerned about.

Multiple indications suggest that the market may be approaching a turning point, and we may see significant upward momentum for Bitcoin in the coming months.

## Introduction
Affected by the market reaction after the release of the US nonfarm payroll report in August, investors' concerns about the US economy falling into recession significantly increased. Subsequently, Bitcoin continued its weak trend and declined, once breaking through the psychological defense line of $54,000.

The price of Bitcoin has slightly rebounded, but market sentiment is still in a state of panic. This article will comprehensively analyze the opportunities in the recent market situation.
 
## September's Continuous Decline, Bitcoin's Bull Market Stress Test?
Last week, the author published a blog post titled "[Does it Fall Every September? Everything You Know about the September Market Trend](https://www.gate.io/blog/4486/does-it-fall-every-september-everything-you-know-about-the-september-market-trend "Does it Fall Every September? Everything You Know about the September Market Trend")", reviewing the decline of the crypto market in September over the years. The recent week's market trend  with the market expectation of sustained weakness in the crypto market this month.

Specifically, the price of Bitcoin has been continuously declining since late August, with drops of 10.79% and 4.24% in the past two weeks, respectively. Last week, panic continued to spread, and the price fell below the important support level of $53,000 at one point. The market was once filled with bearish views.

Although the market briefly rebounded on Saturday, the good times did not last long. The 60-day moving average on the 1H chart suppressed the market and, at one point, fell below the psychological defense line of $54,000.

As of the time of writing, although the price of Bitcoin has slightly rebounded to around $57,000, the future trend is still uncertain, and the market is generally concerned about whether it will continue to decline.
![](https://gimg2.gateimg.com/image/article/17260395381.jpg)
Source: Gate.io
 
Like Bitcoin, <a href="/price/ethereum-eth" target="_blank" class="blog_inner_link">Ethereum</a> has consistently maintained a passive market trend of weak followers. Since September 6, the price of Ethereum has continued to decline from around $2,400, and on the 7th, it hit a recent low of $2,150, also setting a new low since August 5th.

As of now, the price of Ethereum has also rebounded slightly, showing a certain degree of resistance to decline. However, the market's FUD sentiment towards the Ethereum ecosystem remains strong, and Ethereum does not yet have fundamental support stronger than Bitcoin.
 ![](https://gimg2.gateimg.com/image/article/17260395702.jpg)
Source: Gate.io
 
According to data from Coinglass and other sources, the crypto market has been afraid for 26 days in the past month, with only 4 days being neutral. Bitcoin experienced a sharp decline of over 4% in the first 24 hours of last week, while Ethereum experienced a decline of over 6% during the same period. Over 86,000 investors have suffered losses due to severe price fluctuations, with liquidation amounts exceeding $300 million, undoubtedly highlighting the fragility of the current market.
 ![](https://gimg2.gateimg.com/image/article/17260396133.jpg)
Source: coinglass
 
## The Macro Risk of Economic Recession is the Main Cause of the Decline
The recent weak trend in the crypto market is intertwined with multiple complex factors, but the concern of a US economic recession is undoubtedly the macroeconomic pressure that the market is most concerned about.

**1. Increased concerns about economic recession**
A large number of clues indicate that it is highly probable that the United States' economic growth will further slow down due to factors such as a weak job market and increased household debt.

Recently, the US labor market data has been significantly weaker than market expectations, with non farm employment growth of only 142,000 jobs, far below market expectations. At the same time, although the unemployment rate remains low at 4.2%, it has not effectively alleviated market concerns about a slowdown in economic growth. And we have previously mentioned in multiple articles that weak employment data is often seen as a barometer of economic health, and its weak performance directly triggers investors' cautious attitude towards the economic outlook.
 ![](https://gimg2.gateimg.com/image/article/17260396474.jpg)
Source: Political Calculations 2024
 
The remarks of the Chicago Fed Chairman have intensified the market's fear of economic recession, making investors more inclined to hold safe-haven assets and sell high-risk, high-volatility crypto assets. This pessimistic macroeconomic outlook further weakened the overall performance of the crypto market.

On the other hand, although the Federal Reserve's interest rate cut plan in response to the recession is positive for crypto assets, the transmission effect is complex and lengthy, and in the short term, people's panic about the economic recession still dominates. As pointed out in a recent report by Morgan Stanley, it takes up to 12 months for funds to shift from money market funds to risk assets after the first interest rate cut.

**2. Large outflow of institutional funds**
Another important driving force is the <a href="/price/flow-flow" target="_blank" class="blog_inner_link">flow</a> of funds from spot ETFs, a barometer of the Bitcoin market. Since late August, spot ETFs have been showing a trend of capital outflow, especially the Bitcoin spot ETF, which had a net outflow of $706 million last week. The Ethereum ETF has been in a net outflow trend since its listing, indicating the recent pessimistic sentiment of institutional investors towards the crypto market.
 ![](https://gimg2.gateimg.com/image/article/17260396775.jpg)
Source: coinglass
 
**3. Potential selling pressure for Bitcoin miners**
Due to high prices, Bitcoin miners have accumulated a large amount of inventory since mid-August. However, as the price of Bitcoin falls below key psychological levels (such as $60,000) and shutdown prices, the market is concerned that these miners may be forced to sell their holdings due to financial pressure or profit demand.

The data from many analytical institutions further reinforces this concern, pointing out that if market sentiment continues to deteriorate, miners' selling behavior may form a chain reaction and exert downward pressure on the market.

Overall, at a time when there is no phenomenon-level narrative about the emergence of crypto ecosystem applications, the bearish atmosphere in the market has gradually peaked, including the interaction of factors such as weak employment data, withdrawal of institutional funds, and selling pressure from miners, resulting in the current weak situation.
 
## Has the Bearish Sentiment been Released after Falling to the Critical Level?
As shown in the figure below, BTC has been continuously declining since the end of August, with a drop of 10.7% in the first week of September. The price has fallen below key support levels, severely undermining market confidence.
 ![](https://gimg2.gateimg.com/image/article/17260397556.jpg)
Source: Gate.io
 
From a purely technical analysis perspective, the current price is temporarily supported at the $54,000 level, and it is expected to stabilize and rebound from the oversold state. Similar to previous rounds, the recent decline in the Altcoin sector has generally been smaller, indicating a weakening of speculative sentiment in small currencies. This may usher in a wave of Altcoin season market trends with market recovery.

According to the recent chart from Global Macro Investor, Bitcoin's current price structure is very similar to the upward trend in 2019, both experiencing a long period of consolidation. At present, although the price is relatively weak in the short term, it is still an adjustment trend in the upward trend in the long run, and the potential turning point for the price to restart the upward trend may be approaching.
 ![](https://gimg2.gateimg.com/image/article/17260397747.jpg)
Source: LSEG Datastream，Bloomberg-Global Macro Investor
 
In addition, from a fundamental perspective, the price of Bitcoin is influenced by multiple factors, and the weight of macro factors, such as recent panic, will gradually fade away. However, Bitcoin's strong computing power value has reached a historical high, indicating enhanced network security, and upward sentiment may again dominate. As market confidence gradually recovers, investors may re-enter the market and increase prices.

Market attention is also focused on the Federal Reserve's interest rate meeting next week. If the meeting results meet market expectations (such as a 25 basis point interest rate cut), it may ease market tension and provide upward momentum for Bitcoin.

In summary, although the current Bitcoin market faces many challenges and uncertainties, multiple signs indicate that the market may be approaching a turning point. If the current market trend remains unchanged and is driven by factors such as fundamentals, market sentiment, historical similarities, and key events, we may see significant upward momentum for Bitcoin in the coming months.

<div class="blog-details-info">
<div>Author:**Carl Y.**, Gate.io Researcher
<div>Translator:Joy Z.
<div class="info-tips">\*This article represents only the views of the researcher and does not constitute any investment suggestions.
<div>\*Gate.io reserves all rights to this article. Reposting of the article will be permitted provided Gate.io is referenced. In all cases, legal action will be taken due to copyright infringement.
</div>

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