Bitcoin experienced a sharp sell-off, losing more than 3% of its value to reach a low of $63,249. This decline occurred a pivotal week ahead of US economic policy and in the context of growing geopolitical tensions in the Middle East. In addition, the broader crypto market experienced a major liquidation event, exceeding $200 million, highlighted by nearly $150 million in the long liquidation. Despite the overall decline of the market, major altcoins such as Ethereum and Solana is relatively flexible.
Japan’s Economic Developments Fuel Investor Anxiety
The initial wave of panic selling can be attributed in part to large movements in the Japanese economy. The decline of the Nikkei 225 by about 5%, driven by political developments related to the upcoming elections announced by Prime Minister Shigeru Ishiba, contributed to market strain. Moreover, a strong yen and rising bond prices in Japan added to market volatility, further impacting the value of bitcoin.
Another crucial factor in the price movement of Bitcoin is the anticipation of important US macroeconomic events. Fed Chairman Jerome Powell’s upcoming remarks, coupled with the release of key economic indicators such as jobs in JOLTs and manufacturing PMI data (ISM), have increased market concerns. Investors are keeping a close eye on these developments, as future monetary policy, and therefore the crypto market, could shape.
The US Department of Labor will release economic data later this week, including nonfarm payrolls and unemployment rates, which will offer more clarity on the labor market’s health. Market participants speculate that weaker jobs data could prompt the Fed to further rate cuts, affecting stock and cryptocurrency markets. Currently, the price of Bitcoin is hovering around $63,641, reflecting a 3% decline over the past 24 hours, with trading volume rising by 94% indicating increased market activity.
Bitcoin is poised for a new rally despite the current decline
Bitcoin’s price is consolidating after a significant rally over the past weekend, suggesting there will be a small relaxation before the next rally
Bitcoin has risen in value while other altcoins have been consolidating and, for now, the price is falling even harder. While some altcoins maintain a sharp upward trend, Bitcoin hints at the possibility of a downward pullback. This could signal a possible trend reversal, likely outperforming many altcoins in the coming days.
First, markets are about to enter the fourth quarter of the year, which has been bullish in the past. Therefore, it is believed that the growing optimism about the token will revive a strong upward trend in the future. Besides, the recent rally is believed to be the result of the continued growth of stablecoins within the markets.
In the last week of September 23-28, the market capitalization of stablecoins experienced steady growth. This may be a major driver of Bitcoin price movements, as greater liquidity usually means higher Bitcoin prices. Market participants show optimism about Bitcoin, leading to the belief that, regardless of current price movements, the price will remain bullish for an extended period.
However, Bitcoin continues to maintain a strong uptrend regardless of the prevailing market trend in the daily timeframe. The symbol holds the support trend line, forming a hidden bullish divergence. Bitcoin shows a higher low, while the RSI presents a lower low. Therefore, one can be optimistic about Bitcoin despite the unified quarterly closure, as market dynamics may change in the coming days.
Bitcoin flows surpass $1 billion as investor confidence renews
Bitcoin spot ETFs saw net inflows of more than $1 billion over the past week, their highest level since July. An analyst highlights this as evidence of institutional investors’ growing interest in digital assets. These large inflows come at a time when the price of Bitcoin is stabilizing near $64,000, despite a slight decline in early trading on Monday.
This remarkable rise in flows did not go unnoticed by industry experts, as it reflects renewed confidence among investors, especially after the Federal Reserve’s decision to cut interest rates. Experts confirm that the market is becoming more receptive to digital assets, opening the door to future growth opportunities for both Bitcoin and Ethereum. Capital flows towards bitcoin-based financial products reflect growing confidence in the cryptocurrency market, especially in light of macroeconomic shifts, as Japan prepares to amend cryptocurrency laws and reduce taxes on digital assets, facilitating the launch of local investment funds, according to a Bloomberg report.
By Monday morning in Europe, Bitcoin was trading at $63,880, down 2.8%. Ethereum also fell slightly, reaching $2,630, down 0.7%.
Data from crypto asset management firm CoinShares showed continued optimism, with inflows into Bitcoin investment products reaching $1.2 billion for the third consecutive week, driven by dovish monetary policy outlook in the US and positive price momentum. Total assets under management also increased by 6.2% last week.
Interestingly, Ethereum broke its 5-week negative flow streak, recording inflows of $87 million, while altcoins saw mixed results, with Litecoin and XRP recording positive flows, while Binance and Stacks experienced outflows. Meanwhile, the data suggests that Bitcoin’s supply in earnings has maintained a high level, which historically indicates an upward market trend.
