Bitcoin and Ethereum selloff deepen as fundamentals drive crypto lower

Bitcoin Outlook: Bearish

• BTC/USD drops after Jackson Hole hawkish tilt
• Ethereum hit hard by risk aversion as cryptocurrency market cap drops below $1 trillion
• USD businesses with that manufacturing ISM and US NFP (non-farm payrolls) at your fingertips

Bitcoin, Ethereum bludgeoned by Powell

The Jackson Hole economic symposium was the highlight of the week as market participants waited Speech by Fed Chairman Jerome Powell. With the annual event hosted by the Federal Reserve Bank of Kansas City, this year’s topic centered on the “reassessment of constraints on the economy and politics” and the overriding threat of inflation.

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Prior to Powell’s comment, a softer PCE core (the Fed’s preferred measure of inflation) initially allowed Bitcoin to rise before plunging previous support has become resistance at $21,500. While hopes for a 50 basis point rate hike at the September meeting FOMC fell, the major cryptocurrency erased the gains, providing a platform for a bearish continuation.

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5 Minute Bitcoin Chart

Chart prepared by Tammy DaCosta using TradingView

With monetary policy focused on getting inflation back towards the Fed’s 2% target without disrupting the labor market, this could be another big week for crypto.

As markets continue to price in expectations, The US dollar and bitcoin could continue to seesaw in anticipation of August ISM data and the NFP (Non-Farm Payroll) report. With rate expectations favoring a further 75 bps rise next month, rising yields are likely to continue to undermine the upside move.

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As the total market capitalization of the crypto industry drops back below $1 trillion, fundamental and technical levels can lead to increased volatility and increased momentum.

Source: CoinmarketCap.com

In terms of technical analysis, a hold below $21,000 and below the lower bound of the bearish flag at around $20,300 could take price action back to the July low of $18,905, with the June low then coming into play at $17,592.

Bitcoin (BTC/USD) Daily Chart

Chart prepared by Tammy DaCosta using TradingView

— Written by Tammy Da Costa, Analyst for DailyFX.com

Contact and follow Tammy on Twitter: @Tams707