Bitcoin (BTC) fell below $57,000 on Thursday, reversing the brief gains made earlier in the week. As worries about the U.S. economy grow, investors are pulling back from riskier assets like cryptocurrencies.
Bitcoin Falls as Economic Concerns Rise
The leading cryptocurrency dropped by over 2%, hitting $56,700, unable to hold above the $58,000 mark. Since peaking at $65,000 on August 25, Bitcoin has been steadily declining, with short-lived rebounds reflecting a “sell-on-rise” trend.
Most major altcoins, including Ethereum (ETH), XRP, and TON, also followed suit, showing little change in value after Wednesday’s temporary bounces. According to Valentin Fournier, an analyst at BRN, the market’s reluctance to hold risk assets comes from growing concerns about a U.S. recession.
Economic Data Fuels Recession Fears
Fournier explained that recent economic reports highlight increased risks of a recession. The ISM Manufacturing Index fell 0.5% below expectations, and job openings came in lower than predicted at 7.7 million, compared to the anticipated 8.1 million.
“We advise reducing exposure to BTC and waiting for a better entry point amid the current uncertainties,” Fournier added, noting that weak economic data and decreased liquidity are influencing investor sentiment.
Federal Reserve Signals Concern
Further confirming these concerns, the U.S. Bureau of Labor Statistics reported that job openings in July missed expectations, hitting 7.67 million instead of the forecasted 8.1 million. This was further backed by the Federal Reserve’s Beige Book, which highlighted a weakening labor market and overall economic slowdown.
The ISM Manufacturing PMI, released earlier this week, also pointed to continued contraction, reigniting worries over economic growth, which had previously shaken the market in early August.
Risk Appetite Remains Low
Despite bets for potential Federal Reserve interest-rate cuts, Bitcoin’s price has yet to find solid support. Senior market analyst Alex Kuptsikevich from FxPro noted that Bitcoin’s recent weakness could be a warning for traditional risk assets as well.
“It’s possible that the lack of strength in cryptocurrencies reflects an overall limited risk appetite, which may soon affect broader markets,” Kuptsikevich explained.
Conclusion
As Bitcoin continues to struggle, analysts suggest the broader market may follow its lead. The growing economic uncertainty and potential for recession make it a cautious time for investors.
