Bitcoin (BTC) price has dropped significantly, dropping 7% and falling below $52,900 for the first time in over a month. This sudden drop has raised questions among investors and crypto enthusiasts. Several factors have contributed to this sharp drop, and understanding them is crucial to predicting Bitcoin’s next moves.
US jobs data fuels Bitcoin plunge
One of the main reasons for Bitcoin’s decline is the release of US labor market data. The nonfarm payroll data showed that the US added only 142,000 jobs, which is lower than Wall Street’s expectations. Investors are also worried as the unemployment rate remains at 4.2%.
Weak jobs data typically signals a slowing economy, making investors more cautious. This has contributed to Bitcoin’s volatility, driving its price lower along with other risk assets.
Institutional outflow increases sharply
Another major factor in Bitcoin’s decline is the significant outflow from spot Bitcoin exchange-traded funds (ETFs). Data from Lookonchain shows that over $227.82 million was withdrawn from 10 Bitcoin funds on September 6, with Fidelity’s FBTC leading the outflows.
Despite these massive sales, BlackRock is taking a neutral stance and refraining from buying or selling Bitcoin.
Bitcoin miners may be forced to sell
Bitcoin miners have been accumulating BTC since mid-August. However, as the price drops below $60,000, fears are growing that miners will be forced to sell.
Meanwhile, data from Glassnode indicates that selling pressure from miners may increase if pessimistic sentiment persists, which could further pressure the market.
Fears of recession are growing
Concerns about a potential U.S. recession have also contributed to the decline. Chicago Fed President Austan Goolsbee recently hinted at the possibility of a recession, which has spooked investors.
Mass liquidation on the market
Furthermore, the crypto market has seen a massive wave of liquidations. In the past 24 hours, 85,882 traders were liquidated, worth $314.71 million. Bitcoin alone saw $123.40 million in liquidations, with $83.8 million in long positions.
As a result, Bitcoin’s fear and greed index dropped to 23%, indicating extreme fear in the market. Traders are wondering if this dip represents a temporary correction or a deeper market downturn.
