Bitcoin fell back to around $78,300 on September 8 after exceeding $82,000 last week. Ethereum is trading near $2,480, XRP around $1.39 and Solana is losing around 2% for the day. The decline affects the entire market, but it does not yet look like a capitulation: the crypto capitalization falls by around 0.4%. Oil close to $100, high bond yields and the return of expectations of rising US rates explain a good part of the movement.
In brief
- Bitcoin fell back below $79,000 after a recent high above $82,000.
- Markets now price the likelihood of a Fed rate hike in September at around 58%.
- Liquidations reached $165 million, including nearly $115 million on long positions.
Bitcoin falls below $79,000 and drags down altcoins
The movement began after bitcoin again failed below $80,000. BTC had reached around $82,164 last week, its highest level in three months, before losing almost 5% since that peak. We were already noticing bitcoin’s difficulty in maintaining $82,000 after its rebound at the end of August.
Altcoins follow. Ethereum is losing around 1% around $2,480, XRP is down around 1.5%, and Solana is approaching -2%. Variations remain contained for several large capitalizations, even if certain more volatile cryptos decline further.
We must therefore distinguish two things. The market is clearly falling, but today’s figures do not yet depict a crash comparable to the big sell-off sessions seen earlier this year.
Total capitalization is measured at around $2,690 billion, down 0.43%. Its CMC20 index lost 0.53%. The Fear and Greed Index remains even at 72, still in the “greed” zone. Not exactly a panic market. Rather a market which quickly withdraws risk after several weeks of rebound.
Good employment figures put the Fed back at the center of the market
The first problem comes from the United States.
The Bureau of Labor Statistics announced Friday 162,000 job creations in August, with an unemployment rate unchanged at 4.1%. The figure far exceeds the monthly average of just 31,000 jobs recorded over the previous twelve months.
This data changes the reading of monetary policy. A stronger labor market gives the Federal Reserve more room to keep rates high, or even raise them further if inflation holds up. Contracts tracked by CME FedWatch now yield approximately 58.4% probability of an increase by 25 basis points in September.
A few days earlier, the market was still hesitating around 50%. For bitcoin, the mechanics are quite straightforward. Higher rates make bonds and money market investments more profitable. Assets without intrinsic return, and more generally risky assets, become relatively less attractive.
The ten-year US Treasury yield rose towards 4.80%, close to its highest levels since 2023. This movement does not only affect crypto: the Dow Jones, S&P 500 and Nasdaq futures were also trending downward on Tuesday. Bitcoin therefore does not decline alone.
Oil near $100 revives inflation problem
The second factor is in the Middle East. Brent is now trading around $99 per barrel after a further rise in regional tensions. Reuters reports in particular attacks on Saudi energy installations and increasing concerns about supplies.
The crypto market is watching oil for a simple reason: energy directly fuels inflation. Oil sustainably close to $100 can increase the costs of transportation, production and many goods. This complicates the Fed’s work a few days before new US price statistics.
The PPI is expected on Thursday, then the CPI on Friday. The FOMC meeting will then be held on September 15-16, with the monetary decision scheduled for the 16th. The official Fed calendar confirms this deadline.
Another tension creeps into the equation: the Japanese yen has appreciated by about 4% in a week as expectations of rate hikes from the Bank of Japan grow. This movement can accelerate the unwinding of positions financed in yen, the famous carry trades. When cheaply funded leveraged positions are reduced, pressure can quickly transfer to stocks and then to crypto.
165 million dollars liquidated, mainly among buyers
Derivative products then accelerate the movement. Approximately $165.44 million in liquidations, including $114.75 million in long positions. At the same time, open interest increases by 4.37% to reach $423.07 billion. Derivatives volumes exceed 610 billion.
This is a combination to watch. When traders increase their exposure with leverage while bitcoin declines, certain price levels automatically trigger the closing of long positions. These forced sales can then accentuate a decline which had started for macroeconomic reasons.
This phenomenon works both ways. Four days earlier, the market rebound caused more than $400 million in short position liquidations when Bitcoin surpassed $81,000. The market has therefore just experienced two opposing movements in a few sessions. First the shorts suffered. Now it’s the long ones.
Bitcoin ETFs show, however, that institutional investors are not fleeing
One detail prevents this decline from being described as a general withdrawal of capital. US Bitcoin ETFs continue to receive money. On September 3, spot funds recorded $730.8 million in net inflows. The next day, they attracted another 174.6 million. Farside data notably show $454 million for BlackRock’s IBIT on September 3.
We recently noted the best streak of the year for Bitcoin ETFs, with around $3.8 billion collected in three weeks.
This is an important counterpoint. The current decline therefore does not seem to come from a massive withdrawal of institutional investors from ETFs. It looks more like a reaction of liquid markets to rates, oil and short-term repositioning.
Even on Friday, September 4, when inflows slowed sharply compared to the previous day, they remained positive at $174.6 million. Institutional demand has not disappeared. It is simply not enough, for the moment, to neutralize all macro pressures.
The CLARITY Act adds uncertainty, without being the main cause
We add the CLARITY Act among the prudential factors. The Senate is scheduled to attempt a cloture vote on September 15. It will take 60 votes to advance to the full debate.
The chances of adoption have deteriorated sharply in prediction markets over the past few months. We detailed the difficulties of the CLARITY Act before the vote on September 15, while several disagreements remain in the Senate.
However, we must avoid attributing the entire decline to him. The most directly visible elements this Tuesday are macroeconomic: oil around $99, US ten-year yield around 4.8%, rise in rate expectations and parallel decline in stock market futures. The CLARITY Act adds uncertainty specific to crypto, but it seems to amplify caution more than having triggered the movement alone.
Bitcoin is now facing a busy week
The next few days will quickly provide answers. The market will monitor the ten-year Treasury auction, the PPI on Thursday, then especially the CPI on Friday. Higher-than-expected inflation could further bolster rate hike expectations ahead of the September 16 meeting.
For Bitcoin, the $77,000 zone is now closely followed. This level corresponds to the lower part of the recent consolidation after the rebound from $60,000.
The context, however, remains very different from a generalized capitulation: Bitcoin ETFs remain in net inflows, the Fear and Greed index remains high and several large cryptos still retain part of their weekly gains. The current decline mainly comes from a fairly classic mix: higher yields, expensive oil, more uncertain Fed and significant leverage on derivatives markets. This time, the macro has taken over.
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