ccording to data from CoinMarketCap, the global cryptocurrency market cap was down 3.46% in the last 24 hours, slipping below a key level of $2 trillion on September 4. This forms part of the broader market downtrend affecting not just Bitcoin but the whole crypto market. Analysts predict that Bitcoin could be en route to a correction below $54,000.
Bitcoin's Market Correction: Expert Predictions
Currently, the market is very influenced by economic factors. Recent speculations over a rate cut by the US Federal Reserve added to the uncertainty.
While generally, an interest rate cut can be considered positive for risk assets, analysts at Bitfinex believe it may translate to a 15-20% drop in Bitcoin's price. They predict that such a bottom would range between $40,000 and $50,000 in case rates get cut.
According to data from CoinGlass, September is usually the most bearish month for the cryptocurrency, which records average returns of -4.69%. That trend seems to be following this year, with the price of Bitcoin already showing signs of high volatility and further potential losses.
Current Market Decline Factors
In addition to this expected rate cut, several other reasons have caused the market downturn. The outflow from Bitcoin exchange-traded funds was one of the major reasons behind it. According to a report from Farside Investors, U.S. Bitcoin exchange-traded funds have just seen net outflows for five consecutive days, taking the total as of September 3rd to over $287 million.
As investors pull money out of ETFs, this is typically when investors are not very confident in the short-term performance of an asset. This fact has surely contributed to the downward pressure on the price of Bitcoin, something that concerns investors and analysts alike.
This also has a lot to do with the wider sell-offs in the traditional market. Whenever traditional markets head south, this usually results in an eventual sale of crypto holdings that gets applied to the market as a whole to drive its value down. The interlinkage between traditional markets and crypto is getting palpable.
While it would appear things are rather bleak at this time, the long-term prospects of Bitcoin and the greater crypto market are a different matter. According to analysts, although a correction is most likely in place, the cryptocurrencies are very positive for the longer-term outlook.
