Today, Bitcoin prices dropped after the latest US PMI data was released by S&P Global. According to the data, the US economy contracted last month. The US manufacturing PMI index came in lower than the previous month, indicating a volatile week for Bitcoin alongside significant economic indicators being announced.
US Data and Cryptocurrency
While the PMI data is not the sole reason for today’s decline, it was significant in understanding recession concerns. The immediate cause of the decline was the escalating tension between Iran and Israel. Geopolitical tensions negatively impact both stock and cryptocurrency markets, leading to declines, as observed since the onset of the Russia conflict. Returning to the US data, the latest Purchasing Managers’ Index (PMI) from S&P Global was reported at 47.3 for September, down from 47.9 the previous month. A figure below 50 indicates economic contraction, while a figure above 50 points to expansion in the private sector.
Cryptocurrencies Decline in Recession
This contraction data negatively affected the performance of many stocks. A noticeable drop was observed in the prices of Bitcoin and other cryptocurrencies. All major altcoins by market capitalization lost value following the release of this data. Bitcoin and other cryptocurrencies were influenced by the poor PMI data ahead of upcoming employment figures on Friday. Signals of economic contraction can undermine investor confidence, leading to selling pressure in the crypto markets.
Conclusions and Expectations
Bitcoin and cryptocurrencies fell after PMI data confirmed recession concerns for the US economy. Although the decline wasn’t solely due to economic contraction data, a recession could trigger severe sell-off processes in the medium term. This underscores the necessity to monitor signals closely, even if we are not currently in a recession.
Thus, the latest drop in Bitcoin prices is attributed to the PMI data, raising concerns about a recession in the US economy. Geopolitical tensions and weak economic indicators continue to affect cryptocurrency markets.
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