Bitcoin approached a one-month low on Wednesday, reflecting a broader pullback from riskier assets as global investors grapple with economic uncertainty. At one point, the leading cryptocurrency dropped over 4% before recovering slightly to $56,318 by 7:15 a.m. in London. Other major cryptocurrencies, including Ether, also experienced declines.
This downturn in the cryptocurrency market comes as concerns about economic slowdowns in the US and China unsettle investors, contributing to the worst global stock market performance since the August 5 selloff. Market participants are closely watching an upcoming US jobs report, set for release on Friday, for insights into potential further economic weakening.
In response to these uncertainties, there has been a notable increase in demand for Bitcoin put options. Sean McNulty, director of trading at Arbelos Markets, reported heightened interest in options contracts designed to hedge against Bitcoin price declines, particularly with strikes at $55,000 and below. Additionally, a significant position has been taken in contracts expiring on November 29 with a $35,000 strike price.
This increased hedging activity may reflect concerns that Republican presidential nominee Donald Trump—who is perceived as more supportive of cryptocurrency—might lose the election to Democratic Vice President Kamala Harris, whose position on digital assets remains unclear.
Further caution is evident in the cryptocurrency market with a decline in open interest for CME Group’s Bitcoin futures, reaching its lowest level since May. Additionally, US Bitcoin exchange-traded funds have experienced their longest streak of net outflows since June, according to Bloomberg data.
Technical analyst Katie Stockton from Fairlead Strategies LLC has adopted a “long-term neutral bias” for Bitcoin. Tony Sycamore, a market analyst at IG Australia Pty, noted that Bitcoin may face a potential test of the $52,000 to $50,000 price range.
Bitcoin’s recent performance has been lackluster compared to its peak of $73,798 in March. Historically, September has been a challenging month for the cryptocurrency, with an average decline of over 8% based on data from the past five years.
