BTC again faces selling pressure in the lead-up to the U.S. ISM Manufacturing data.
A reading below 48 could yield a deeper price drop, one observer said.
The ISM data is scheduled for release Tuesday.
Bitcoin (BTC) faced selling pressure during the European morning, reminiscent of the price swoon seen ahead of the release of key U.S. data in the past couple of months.
The largest cryptocurrency by market value fell nearly 3% on Monday to $63,600, breaching support of a bullish trendline that represented the rally from the Sept. 6 low of $52,600 to last week’s highs near $66,500, data from CoinDesk and TradingView show. Futures tied to the S&P 500 were little changed near record highs and the dollar index was steady at 100.30.
The slide seems to be a typical bull-market pullback that follows overbought conditions, according to 10x Research.
“In last week’s report, we briefly noted that BTC appears to be overbought in the short term, as reflected by the heightened levels of the Greed & Fear index,” Markus Thielen, founder of 10x Research, told CoinDesk.” Current short-term reversal signals have turned bearish, indicating that a pullback is likely over the next few days.”
Thielen added that since June, the first week of the month – when U.S. ISM Manufacturing data is released – has been characterized by 10% price sell-offs. The latest decline is consistent with that pattern.
The September report will be released Tuesday and is expected to show that manufacturing activity continued to contract in the final month of the third quarter, according to FXStreet.
“The ISM Manufacturing New Orders data shows forward-looking indicators have fallen to near-recession levels. This makes tomorrow’s data highly uncertain—if the reading falls below 48.0, it could prompt another Bitcoin drop, while a higher number might fuel a rally,” Thielen said in a note to clients while maintaining a bullish outlook for the fourth quarter.
Optimism about the fourth quarter largely stems from expectations that the Federal Reserve will deliver another 50 basis-point cut in interest rates and China’s recent big stimulus announcement.
The market might get a clue of what the Fed plans to do later today because Fed Chair Powell is scheduled to speak on the economy at the National Association for Business Economics annual meeting in Tennessee.