The Bitcoin price fell to USD 52,500 yesterday and has only recovered slightly so far.
The reason for this appears to be the labour market data from the US, which is fuelling fears of recession. After the initial reaction to the data was positive, Bitcoin fell significantly yesterday, hand in hand with the stock markets, and ended the trading day down around 4%.
Fears of recession
The primary price driver for the capital markets - and therefore also for Bitcoin - currently appears to be the state of the US economy. Investors are focusing in particular on the data for the labor market in the world's most relevant economy.
The figures for August were released yesterday: although the unemployment rate of 4.2% was in line with expectations, fewer new jobs were created than expected - 142,000 instead of the consensus estimate of 165,000.
The Federal Reserve is almost certain to cut interest rates at the upcoming central bank meeting on September 18. However, there are currently fears that the turnaround in monetary policy will come too late and will not be sufficient to support the economy.
Although the US economy is clearly weakening, 70% of the market is currently expecting an interest rate hike of just 25 basis points in September, as the statements made by the monetary authorities currently tend to suggest this. However, there are increasing voices suggesting that a cut of 50 basis points would be appropriate at this time.
Negative record for Bitcoin ETFs
Meanwhile, demand for US Bitcoin spot ETFs is slowing significantly. The investment products have seen strong outflows over the past few days as fears of recession have increased significantly. Yesterday alone there were 170 million US dollars and since August 27 the total has been just under 1.2 billion US dollars.
This means that ETFs have now seen eight consecutive trading days of outflows - a negative record for investment products approved in January. Previously, there had been two series of seven consecutive negative days. Nevertheless, the cumulative inflows since the start of trading are still consolidating at a high level of just under USD 17 billion.
Crash risk?
September is historically a rather weak month for the capital markets and also for Bitcoin. However, the fourth quarter is usually all the stronger - Blocktrainer.de reported.
The risk of a more severe recession in the US cannot be dismissed at the moment. Further developments in this direction would certainly have the potential to drag the stock markets and Bitcoin down significantly. On the other hand, however, the markets always trade the future and it is conceivable that the worst is already priced in.
BTC still correlates strongly with the stock markets and if there is a major correction there, this usually drags the still young asset down with it. This was the case during the corona crash or during the sell-off at the beginning of August this year, when Bitcoin fell below the USD 50,000 mark.
The coming weeks and months will show whether the US Federal Reserve's monetary easing will have a positive effect on asset prices again in the short and medium term or whether this will be overshadowed by an economic crisis. In the longer term, however, Bitcoin has a high correlation with the amount of money in circulation, which is likely to increase significantly in the near future as a result of interest rate cuts by the Federal Reserve.
Although BTC has currently fallen by more than 25% since its all-time high in mid-March, the asset is still up almost 30% since the start of the year. This makes Bitcoin look outdated compared to other asset classes. The Nasdaq 100 technology index has gained around 10 percent since January 1 and the precious metal gold is trading just over 20 percent higher.