Key Takeaways
What triggered the crypto market dump?
Macro uncertainty led to another wave of liquidations.
What are analysts’ projections?
Analysts expect a dip to $107K if the U.S labor market shows signs of resilience.
Bitcoin [BTC] led the crypto market sell-off with a dip of about 4% after the release of U.S jobless claims data on 25 September. The data revealed a weak U.S labor market, raising hopes for another Fed interest rate cut.
In fact, the odds for another 25 basis point (bps) rate cut for next month jumped by 2% to 87%.
Source: CME FedWatch tool
However, the Fed’s inflation gauge, the PCE (personal consumption expenditure) index, scheduled for 26 September, could impact the aforementioned odds.
In an email statement, Jake Kennis, Senior Research Analyst at Nansen, told AMBCrypto that traders should watch any PCE deviation from the 2.7%-2.9% year-on-year target. Kennis added,
“Higher-than-expected inflation could signal more hawkish Fed policy and risk-off sentiment that typically pressures crypto markets.”
However, a cooler inflation could boost BTC, ETH, and other risk assets as this would allude to potential Fed dovishness.
U.S shutdown fears trigger liquidations
Fears of a U.S government shutdown have also dampened market sentiment, triggering another round of liquidations.
In fact, as of press time, the U.S Congress had not agreed on a way to fund the government. This could stall most of its operations.
Polymarket, for example, is now pricing a 69% chance of this happening by 01 October, something that has only spooked the markets further.
Ahead of the inflation data and the shutdown fears, Bitcoin extended its decline to below $109,000. Right before the New York trading session opened on Friday, the cryptocurrency was valued at $108,956.
Source: CoinMarketCap (As of 7:25 AM, New York Time on 26 September)
Solana [SOL] dropped the hardest among the large caps, slipping by about 5% below $200. Binance coin [BNB], which printed a new ATH above $1000, was down to $934, after a 5% dip.
Notably, XRP also saw considerable sell-offs of about 4%, followed by Ethereum [ETH] at nearly 3%.
According to the crypto-trading desk QCP Capital, the bullish market structure is still intact. Unless BTC slips below $107k. Especially if next week’s jobless claims fall below expectations.
The firm noted,
“Q4 seasonality and expected Fed cuts keep the backdrop constructive, unless next week’s payrolls break the narrative.”
Interestingly, $107k is a huge lower liquidity pool on the 3-month liquidation heatmap charts. Hence, it would be a key level to watch out for in the near term.
Source: CoinAnk
Meanwhile, another $1 billiion worth of positions were wiped out on Thursday, bringing this week’s liquidations to over $3 billion. It remains to be seen whether bulls come back in early October or not.
Source: Coinglass
