Bitcoin drops to lowest level since early August

Bitcoin dropped below the $53K level on Saturday after the August Nonfarm Payrolls (NFP) report was released.

The uptick in unemployment kept short sellers in the crypto market excited. The NFP report tracks changes in the US labor force participation rate except for farmers. The report is regarded as a crucial gauge of the health of the economy and has historically affected Bitcoin price

The Federal Reserve (Fed) meeting later this month is now the focus of attention after U.S unemployment rate is expected to drop to 4.2%.

The collapse validated BitMEX co-founder Arthur Hayes’s prediction that cryptocurrency holders may still experience more suffering. Hayes forecast on Thursday that Bitcoin might fall even lower over the following two days. He tweeted, “BTC is heavy, I’m gunning for sub $50k this weekend

“I made a brazen short. Please pray for me, for I am a degenerate. Early in August, following the Bank of Japan’s first interest rate increase in more than ten years, the price of Bitcoin momentarily fell below $50,000.” he said. The “Extreme Fear” score on the Crypto Fear and Greed Index is 23.

Nonetheless, experts contend that Bitcoin will benefit greatly if the US economy enters a recession by 2025 and the Fed and government respond with significant rate cuts, quantitative easing, and increased spending. Ultimately, Bitcoin has been described as an excellent hedge against the depreciation of government currency.

An excellent illustration of this happened in 2020–2021, when substantial fiscal and monetary stimulus caused Bitcoin to soar to new heights, only to plummet precipitously when this support was eliminated (the Fed raising interest rates, for example).

But that time is still a long way off. As US economic data continues to deteriorate and markets remain confused about the government’s or Fed’s response, rising uncertainty could harm risk assets generally, including Bitcoin. This is because there is a greater chance of a near-term recession. Long-term investors should continue purchasing dips in Bitcoin with expectations that Bitcoin will surpass $100,000 in the next years.