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Cryptocurrency Market Declines as Economic Data Emerges
Explore the recent decline in the cryptocurrency market as new economic data surfaces. Understand the factors influencing this downturn and what it means for investors and the future of digital currencies.
Cryptocurrency Market Faces Downward Pressure
The cryptocurrency market continued its downward trend early in the U.S. trading session, following a pattern that has become increasingly familiar over the past few weeks. Approximately ninety minutes after the U.S. stock markets opened post-Monday’s Labor Day holiday, bitcoin (BTC) experienced a decline of 1.5%, settling at $57,800. Meanwhile, ether (ETH) dropped by 3%, reaching $2,442, marking its lowest point since early February. The broader market gauge, the CoinDesk 20 Index, was down by 1%, though a few constituents, notably lumens (XLM) and litecoin (LTC), managed to post modest gains during the session.
This decline in the cryptocurrency sector coincided with significant losses in the stock market, highlighted by a 2.4% fall in the Nasdaq and a 1.5% dip in the S&P 500.
U.S. August Economic Data Begins to Emerge
This morning’s ISM Manufacturing PMI report for August indicated a continued contraction, with a reading of 47.2 compared to the expected 47.5 and July’s figure of 46.8. The details of the report conveyed a somewhat stagflationary sentiment, as New Orders slipped to 44.6 from July’s 47.4, while Prices Paid increased to 54.0 from 52.9.
In response to these lackluster numbers, traders have adjusted their expectations regarding Federal Reserve monetary policy. The likelihood of a 50 basis point rate cut in September has risen to 39%, up from 30% just a day prior, according to the CME FedWatch tool. However, the prevailing consensus still favors a more modest 25 basis point cut, with a 61% probability.
The key event on the horizon for U.S. macroeconomic news – and potentially a decisive factor in determining whether the Fed opts for a 25 or 50 basis point cut – is the August employment report scheduled for release on Friday. Economists predict that job gains will rebound to 160,000, a recovery from July’s disappointing figure of 114,000. Additionally, the unemployment rate is forecasted to decrease slightly to 4.2%, down from 4.3%.