Recession is spooking markets and crypto – Where’s Bitcoin new support line?

If you’re an investor, there are some words that you don’t want to see popping up too much in the press. I think of terms such as fraud, insider information, bubble, inflation and of course the one that causes the most fear: recession.

Although analysts are falling over themselves to declare that a stock and crypto dip in August (as we have seen in recent weeks on the tech exchanges) is absolutely normal, the word ‘recession’ can now be seen on several major business websites as well.

Intel yesterday:

• Suspends dividend
• Announces 15,000 layoffs
• Reports double earnings miss

Intel this morning: pic.twitter.com/YsSwS5r9Ha

— Morning Brew ☕️ (@MorningBrew) August 2, 2024

Although Bitcoin is still trading at a very high level, we are already wondering: where is support to be found if we fall further?

Federal Reserve

As always with bad news, investors look for someone to blame. Although the United States seemed to be making a kind of ‘soft landing’ (in other words, the economy is slowing down due to higher interest rates, but there is no recession), more and more economists fear that the Federal Reserve has simply kept interest rates too high for too long and that a recession is therefore almost certain to occur. The newest American jobs report that came out yesterday did not bode well either.

Literally ten minutes ago:

“I’m beginning to smell a recession coming.”pic.twitter.com/UZXhbQVQmD https://t.co/kofujpkOx2

— NRCC (@NRCC) August 2, 2024

Optimists point out that this is simply the effect of the summer months, which are usually bad for the stock market.

Support line

The crypto market is responding in tandem with tech. Bitcoin found support around the $62,000 level earlier this week, but even that isn’t holding this morning

$BTC vs $USDT - Worldwide stock market losses reverberate into the #crypto sector, with #Bitcoin retracing to $61.5K at the time of this chart. $60K is in sight, with $54K being a potential bottom given a short-term capitulation. Bargain hunting is open, folks. pic.twitter.com/eNB0VaITPy

— Priormiles68 (@priormiles68) August 2, 2024

Luckily, well-known analyst Alex Kuptsikevich from FxPro quickly summed them up for us.

“If the decline develops, dynamics around the $63K and $61K levels, near where the 50 and 200-day moving averages are, will be important. A failure of this support will open the way to $55K, which is quite frightening.”

However, Alex also puts things into perspective and reiterates that August is historically very bad for Bitcoin.

“August is considered one of the two worst months for BTC. Over the past 13 years, bitcoin has ended the month up only five times and down eight times. The average decline was 15.4% and the average rise was 26%.”