The cryptocurrency market experienced sharp fluctuations over the weekend. Leading cryptocurrency Bitcoin (BTC) opened the week at $107,383, while Ethereum (ETH) fell to $4,385. Bitcoin then rose to $109,500, and Ethereum, from the bottom, rose to $4,460. So, what was behind the decline? Recent macroeconomic data, particularly from the US, dampened investors' risk appetite and increased selling pressure in the market.
PCE data shook the crypto market
Last Friday's Personal Consumption Expenditures (PCE) inflation data was the main factor determining market direction. According to the data, core inflation rose by 2.9% year-on-year in July. This figure, which was in line with expectations, was the highest rate seen since February. The persistence of high inflation overshadowed expectations for an interest rate cut expected in September. Presto Research analyst Min Jung said, “A sell-off in the crypto market has intensified following the PCE data. Investors are pricing in the possibility of the Fed postponing its interest rate cut.”
Whales are selling
In addition to the pressure created by the macro data, large-scale Bitcoin wallet sell-offs have also pushed prices down. Kronos Research CIO Vincent Liu noted that recent whale sell-offs have led to the liquidation of leveraged positions, saying, “The $100,000 level stands out as critical psychological support for Bitcoin. If this level is broken, a broader liquidity squeeze could occur in the market.”
Liu also emphasized that $4,000 is a critical threshold for Ethereum. He warned that if it falls below these levels, the crypto market could face a much sharper correction.
Altcoins also under pressure
Not only Bitcoin and Ethereum, but also leading altcoins, have lost value. XRP fell 3.67% to $2.73, while Solana (SOL) retreated 2.71% to $198.6. The broader market was in the red as investors averted risk. However, at the time of writing, a partial recovery was underway. Current prices:
- XRP (XRP): $2.79
- BNB (BNB): $865.17
- Solana (SOL): $202.78
- Dogecoin (DOGE): $0.216
- TRON (TRX): $0.341
However, the last 7-day performance remains negative: XRP is down 4.79%, and ETH is down 2.77%.
All Eyes on Nonfarm Payrolls and the Fed
Investors are now on the radar for this week's Nonfarm Payrolls (NFP) data. A strong labor market performance could support the Fed's tight stance and create further selling pressure in the crypto market. Weak data could boost demand for riskier assets, triggering a recovery in Bitcoin and Ethereum.
The Fed's highly anticipated interest rate decision will be announced at the FOMC meeting on September 16-17. According to CME FedWatch Tool data, markets still expect a 25 basis point rate cut with an 87.6% probability. However, high inflation could lead to a reshaping of these expectations in the coming days.
The cryptocurrency market is on edge due to both macro data and on-chain movements. Whether Bitcoin can maintain its $100,000 support level and Ethereum's $4,000 support level will determine short-term direction. The next two weeks are crucial for market participants due to both employment data and the Fed meeting.
