Bitcoin Retraces Below $57K as ‘Sell-on-Rise’ Action Continues

Bitcoin (BTC) dropped below $57,000 on Thursday, reversing Wednesday’s gains as lingering concerns about the strength of the U.S. economy prompted investors to sell risk assets as they rebounded.

The leading cryptocurrency by market value fell over 2% to $56,700, having failed to secure a foothold above $58,000 on Wednesday. Prices peaked above $65,000 on Aug. 25 and have been falling ever since, with the downtrend characterized by brief, shallow bumps, a sign of a persistent “sell-on-rise” mentality.

Most other cryptocurrencies, including ether (ETH), XRP, TON and others, also erased Wednesday’s bounces, trading largely unchanged on a 24-hour basis, according to CoinDesk data. The CoinDesk 20 Index (CD20), a measure of the broader crypto market, was recently 0.9% higher.

The sell-on-rise bias likely stems from concern that U.S. recession risks are growing, a sentiment that favors reduced exposure to risk assets, according to Valentin Fournier, an analyst at digital assets advisory firm BRN.

“Economic reports are increasingly suggesting the risk of a recession should not be discounted,” Fournier said. “The ISM manufacturing index has fallen 0.5% below expectations, and job openings are at 7.7 million compared to the anticipated 8.1 million.”

“Given the current economic uncertainties and potential for decreased liquidity, we recommend reducing exposure [to BTC] and waiting for a better entry point before increasing investments,” Fournier added.

The U.S. Bureau of Labor Statistics published the Job Openings and Labor Turnover Survey (JOLTS) on Wednesday, showing the number of job openings on the last business day of July at 7.67 million, missing the market expectation of 8.1 million and weaker than the downwardly revised June figure of 7.9 million, according to data source FXstreet.

Meanwhile, the Federal Reserve’s Beige Book, a summary of commentary on economic conditions, was the most downbeat in ages, pointing to a “slowing, slackening labor market,” according to Julia Pollak, chief economist at ZipRecruiter.

On Tuesday, the ISM manufacturing PMI signaled a continued contraction in the activity in August, reviving the growth scare that rocked risk assets, cryptocurrencies among them, early last month.

The weak data has emboldened bets for Federal Reserve interest-rate cuts, although it has failed to put a floor under BTC’s price so far.

Alex Kuptsikevich, senior market analyst at The FxPro, said the weakness in bitcoin might be a red flag for traditional risk assets.

“It is possible that the weakness in cryptocurrencies is a manifestation of a very limited risk appetite, and the rest of the markets may soon follow the lead of cryptocurrencies,” Kuptsikevich said, noting BTC’s inability to draw long-lasting strength from the recent weakness in the dollar index.

“Bitcoin is down for the ninth day out of the last 11 as its attempt to consolidate above the 200-day average triggered an intensified sell-off. This pattern persists into Thursday morning as the price continues to test the lows of the last four months,” Kuptsikevich told CoinDesk in an email.