The cryptocurrency market experienced a notable drop on Tuesday as trading began in the United States following the Labor Day holiday.
This drop coincided with a broader sell-off in traditional financial markets, highlighting the growing correlation between digital assets and conventional stocks.
Bitcoin BTC/USD saw its value decrease by 1.5% to $57,800, while Ethereum Ethereum/USDthe second-largest digital asset, saw a steeper drop of 3%, hitting $2,442, its lowest point since early February.
The cryptocurrency market movement appears to be influenced by macroeconomic factors, as evidenced by the publication of the ISM Manufacturing PMI report for August.
The report indicated an ongoing contraction in the manufacturing sector, with the index coming in at 47.2, slightly below expectations.
In particular, the details of the report suggest a worrying combination of declining new orders and rising prices, which could indicate stagflationary pressures.
Read also: Qatar unveils cryptocurrency rules as Middle East embraces digital assets
In response to these economic indicators, market participants have adjusted their expectations regarding the Federal Reserve's upcoming monetary policy decisions.
He CME GroupThe FedWatch tool from now on sample a 39% chance of a 50 basis point rate cut in September, up from 30% just a day earlier.
A 25 basis point cut remains the favourite outcome at 61%.
As the market digests these developments, all eyes are on the upcoming August employment report, due out on Friday.
The report is widely seen as a crucial factor in determining the Fed's next move, with economists projecting a rebound in job gains to 160,000 and a slight drop in the unemployment rate to 4.2%.
For those seeking deeper insights into the future of cryptocurrencies and their place in the broader financial landscape, Benzinga’s Future of Digital Assets event on November 19 promises to be a key forum for discussion and analysis.
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