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Bitcoin plunged 3 percent to $56,000 (76 million won), Friday, amid concerns over a U.S. economic slowdown, with market anxiety heightened by the impending release of August U.S. employment data, according to market watchers.
Further fueling concerns over the sustained downtrend is a Bitfinex report forecasting a potential 20 percent drop in the values of the digital coins to $40,000 if the U.S. Federal Reserve (Fed) announces a 50 basis point in the federal funds rate this month.
Experts say the crypto market weakness will continue for the time being, strained by lack of demand in a clear bearish sentiment.
According to market data, Bitcoin traded at 76.34 million won on Bithumb, a Korean cryptocurrency exchange, down 0.7 percent from the previous day.
On Upbit, another major exchange in Korea, the digital coin traded at 76.48 million won, reflecting a decline of more than 3 percent.
Ethereum declined to 3.21 million won on Bithumb, down 0.16 percent. On Upbit, it traded at 3.22 million won, down 3.16%.
The "kimchi premium" stood at 1.8 percent, reflecting a recovery from its previous low near zero at the end of July. This figure is still significantly lower than the over 10 percent premium observed in mid-March, when the digital coin's value surpassed 12.4 million won.
The premium refers to the price difference of digital coins between Korean exchanges and offshore exchanges. The higher the figure, the stronger the demand from investors in Korea.
Behind the weak price movements are lower-than-expected U.S. private-sector payrolls. The United States added only 99,000 jobs, far below the previous market expectation of 144,000. It was the smallest gain since 2021.
This increases the chance of the Fed cutting interest rates during its upcoming Sept. 18 Federal Open Market Committee meeting.
CryptoQuant's chief analyst Julio Moreno said Bitcoin's current weakness is due to a lack of observed demand increase with all valuation indicators in a bearish phase.
"Bitcoin price is down simply because there is no demand growth," Moreno said on X, formerly Twitter. "Indeed, demand is declining right now. Basically all valuation metrics are in bearish territory."
He is also of the view that no one can make a definitive prediction on the timing of the rebound.
"Unfortunately, nobody knows (whether the prices will hit an all-time high in the fourth quarter). That's why we monitor demand and other metrics. Yes, seasonality is positive in Q4. But it also depends on the overall economic and Bitcoin market conditions.."
The Bitfinex report said crypto investors were looking forward to the Fed's cut in September as a catalyst for a bull move, worn down by months of lackluster price action.
However, escalating recession fears can translate to a deeper correction.
"Bitcoin could drop as much as 20 percent following a September rate cut if the easing cycle is paired with a recession," the report said.
A 50 basis point "Big cut" might result in a short-lived spike only to be erased by growing concerns of an oncoming recession and more pain for asset prices, Bitfinex added.