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The cryptocurrency market opened in the red on September 3, with total market capitalization falling by over 1.5% to approximately $2.03 trillion. This decline is largely attributed to disappointing US economic data and a sharp sell-off in the stock market.
The downturn in crypto prices mirrors the weakness observed in US equities. The S&P 500 experienced its steepest drop since early August, falling by 1.8% shortly after the market opened. The Dow Jones Industrial Average dropped 563 points, or 1.4%, while the Nasdaq Composite fell by 2.9%. Cryptocurrencies also took a hit, with {Bitcoin} (BTC) falling 1.6% to $57,713 and Ether (ETH) decreasing 3.4% to $2,441.
The decline follows a weak report from the Institute for Supply Management (ISM), which showed that the US manufacturing sector contracted for the fifth consecutive month. The ISM Purchasing Managers' Index (PMI) came in at 47.2 points for August, falling short of the expected 47.5 points. New orders dropped to 44.6 points, indicating continued contraction. This data has heightened expectations that the Federal Reserve might lower interest rates in its next meeting on September 18. Futures markets are anticipating at least a quarter-point rate cut, with a smaller chance of a 50-basis-point reduction.
Additionally, the crypto market faced significant liquidations, particularly in long positions. Over $65 million worth of long positions were liquidated in the past 24 hours, compared to $35 million in short positions. Ether saw $21.9 million in liquidations, while Bitcoin experienced $18.44 million. This surge in liquidations has added to the selling pressure, contributing to the market's decline.
Technically, the crypto market is experiencing a correction within a descending parallel channel pattern. The total market capitalization has dropped 27% since reaching $2.734 trillion in March. The market has lost crucial support levels, including the $2.2 trillion mark and the middle boundary of the descending channel.
The relative strength index (RSI) at 45 reflects the increasing influence of bearish sentiment. If the downward trend persists, the market capitalization could decrease further. Conversely, a break above the middle trendline could signal a move toward higher levels.
