Bitcoin drops below $60,000 as recession fears escalate

Key Takeaways

US job market downturn and high unemployment rate trigger Bitcoin’s fall to $60,000.
Bitcoin’s MVRV ratio suggests it is undervalued, hinting at a potential market rebound.

The price of Bitcoin (BTC) fell below $60,000 on Saturday amid growing fears that the US could be sliding into recession, according to data from TradingView.

The recent price decline followed a rough Friday marked by a weaker-than-expected US jobs report and major crypto transfers by crypto lender Genesis, as reported by Crypto Briefing.

Data from the Labor Department showed that the US economy added 114,000 jobs in July 2024, considerably lower than the estimated 175,000. The unemployment rate also unexpectedly rose to 4.3%, its highest level since October 2021.

These figures fueled anxieties about the health of the US economy, especially following the Federal Reserve’s (Fed) decision to maintain interest rates at 5.25% to 5.5% on Wednesday.

Fed Chair Jerome Powell hinted that a rate cut might be considered in September if economic indicators show improvement. However, economists are worried that the US economy is weaker than the Fed has realized. The current economic slowdown might prompt an earlier rate reduction to boost demand.

The cooling job market and rising unemployment rate triggered a sell-off across global stock markets. Major indexes like the Dow Jones Industrial Average and S&P 500 plummeted in early trading on Friday.

Bitcoin, which started the week near $70,000, tumbled below $62,000 on Friday and extended its slide over the weekend, TradingView’s data shows. The flagship crypto is currently hovering around $60,000, down over 11% in a week.

As losses mounted, investor sentiment turned bearish. According to data from Alternative.me, the Crypto Fear and Greed index fell to 37, shifting from “greed” to “fear” for the first time in three weeks.

Bitcoin poised for a relief rally: Santiment

Bitcoin is poised for a price rebound after a week of sluggish performance, said crypto analytics firm Santiment in a recent post on X.

📊 Crypto markets have retraced across the board, leaving traders calling for sub-$50K BTC once again. However, history shows that when we see such low 7-day average trader returns for top caps like BTC, ETH, ADA, XRP, DOGE, and LINK, bounce probabilities rise significantly. pic.twitter.com/cBGQ6cxyt2

— Santiment (@santimentfeed) August 2, 2024

According to Santiment, the Market Value to Realized Value (MVRV) ratio, which measures the average profit or loss of Bitcoin holders, is currently at negative 5.5%. Historically, such low levels have preceded price rallies. The firm noted that Bitcoin experienced 7% and 9% surges on two previous occasions (July 4 and 25) when the MVRV dipped to this level.

Santiment also pointed out that other major cryptos, including Ethereum, Cardano, Ripple, Dogecoin, and Chainlink, are showing similar signs of undervaluation based on their MVRV ratios.

While past performance is not indicative of future results, Santiment’s data suggests that a relief rally could be on the horizon for Bitcoin and some major altcoins.