Bitcoin slips below $57k, fear and greed index points to more downside

Bitcoin price continued its slow retreat after the weak US jobs report and as the crypto fear and greed index dropped to the fear zone.

Weak US jobs data

Bitcoin (BTC) dropped to a low of $56,800 after ADP published a weak private payrolls report. According to the company, the American economy created just 99,000 jobs in August, the lowest increase in over two years. The figure was much lower than the median estimate of 144k.

On Wednesday, Sep. 4, a separate report by the Bureau of Labor Statistics revealed that the number of job vacancies fell to 7.7 million in July, the lowest number since 2021. 

Therefore, there is a risk that the BLS will publish another weak nonfarm payroll report on Friday. Economists expect the numbers to show that the unemployment rate remained at 4.3% as the economy added 164k jobs.

These numbers suggest that the Federal Reserve will likely deliver a rate cut later this month. This serves to explain why the US dollar index has retreated to $101.18 while the yield curve has disinverted. 

In theory, these numbers should be bullish for Bitcoin and altcoins like Ethereum (ETH) and Solana (SOL). For example, stocks and cryptocurrencies rallied to record highs when the Federal Reserve started cutting in 2020.

Crypto fear and greed index slips

Bitcoin’s price retreat happened as a sense of fear spread in the crypto industry. The closely watched crypto fear and greed index dropped to the fear zone of 34, its lowest level in over a month.

A likely reason for this fear is the ongoing concern over a recession in the United States, following a series of weak economic numbers.

Additionally, Bitcoin demand among institutional investors has waned, with spot Bitcoin ETFs experiencing outflows for the past seven consecutive days. They have lost over $802 million in assets during this period, according to SoSoValue. Ethereum ETFs have also had net outflows of $562 million since inception.

Bitcoin’s weak technicals

Bitcoin has also shown some weak technical indicators, and the situation may worsen. It has formed a series of lower highs at $73,800, $72,000, and $70,000. There are also signs that it will form a death cross as the 50-day and 200-day Exponential Moving Averages are about to cross each other.

Golden and death crosses are some of the most feared patterns in technical analysis. Bitcoin formed a golden cross in October 2023, leading to a 170% surge to a record high of $73,800. It also dropped by over 67% when it formed a death cross in January 2022.