Bitcoin fell below US$77,000, an analysis of the reasons for the cryptocurrency market's collapse t

The crypto market suffered a difficult day, with Bitcoin falling below the US$77,000 mark.

The cryptocurrency market performed weakly today, and the price of Bitcoin fell below US$77,000 was one of the main reasons for the market downturn. In the past 24 hours, Bitcoin has traded at approximately US$76,776, a drop of 0.70%. The broader crypto market performed even worse, with an overall decline of 1.06%.

Traders are taking a cautious approach as expectations for a Fed rate hike rise, outflows from exchange-traded funds (ETFs), and uncertainty increases over the upcoming CLARITY Act vote. Faced with multiple major events coming, many investors choose to reduce their risk exposure rather than increase their positions.

Bitcoin fell below US$77,000, and the crypto market rose across the board.

Bitcoin prices fell below the US$77,000 mark after lack of momentum near recent highs. It is worth noting that recent Bitcoin is highly correlated with the trend of traditional markets. In the past week, it has a 66% correlation with the S & P 500 index. Therefore, when the stock market fluctuates, crypto assets often fluctuate with it.

Source: TradingView

We checked the Bitcoin chart and the market seems to be in a wait-and-see mode at the moment. Bitcoin is trading at approximately US$76,709, and market trading volume is very sluggish. Momentum indicators also do not provide much help. The Relative Strength Index (RSI) was 35.99 and the Ultimate Oscillator was 34.94, both indicating oversold conditions.

This does not mean a rebound is coming. It only suggests that sellers are controlling short-term trends and traders are waiting for a stronger catalyst before taking the next step.

Concerns about the Federal Reserve's interest rate hike and rising government bond yields are putting pressure on the crypto market

The biggest problem facing the crypto market currently is the Federal Reserve. August inflation data was higher than expected. The core consumer price index (CPI) rose 0.3% month-on-month, compared with a forecast of 0.2%. This data point quickly changed market expectations. Crypto Rover pointed out that the market currently expects a rate hike on September 16 to be between 78% and 87%. As a result, traders are preparing for the Fed's action.

Higher interest rates often draw liquidity away from financial markets. At the same time, they also make safer assets such as treasury bonds more attractive. This combination often puts pressure on risky assets, and bitcoin prices have been feeling the pressure this week.

Extended reading: This week's gold and silver price forecast: The Federal Reserve's decision may change everything

Crypto clearing intensifies selling wave

The decline was not just due to the Federal Reserve. The U.S. spot Bitcoin ETF has recorded capital outflows for four consecutive days. The latest data shows that the redemption amount on September 11 was US$13.29 million, ending a previous period of strong institutional demand.

Meanwhile, long-term holders sold approximately 539,000 bitcoins this year in the US$77,000 to US$80,000 range. This creates a huge supply area above the market. Whenever Bitcoin prices rise, you encounter sellers seeking to lock in profits. As ETF buyers decrease and new supply increases in the market, downward pressure becomes difficult to absorb.

CLARITY Act uncertainty adds another risk ahead of Monday

Traders are also closely watching the CLARITY Act. Bitcoin News shared comments from Patrick Witt, executive director of the President's Digital Assets Advisory Council, who hinted at positive developments before the Senate vote and tweeted: "It's a bad day to be a CLARITY pessimist."

However, the probability of passing the legislation on Polymarket is only 20%. In addition, political attention surrounding the bill is also increasing. Bitcoin Magazine reported that President Trump met with advisers on Friday to discuss ethics provisions related to the legislation.

Currently, investors seem more inclined to wait for specific developments rather than make aggressive bets before voting.

Can Bitcoin be restored, or is the next target bit US$75,000?

Bitcoin is approaching an important decision point. Support is between $76,300 and $76,500. If buyers can hold on to the area, Bitcoin could stabilize and try again to hit $78,000, followed by the critical psychological level of $80,000. Therefore, the key is whether the support level is solid.

If the support level is lost, the target level below will quickly appear. The first area to focus on is around $74,708, followed by $74,000. After that, traders will focus on $72,000 and $70,000.

Currently, Bitcoin is being pulled by forces from multiple directions. The rising probability of interest rate hikes, weakening demand for ETFs, profit-taking by long-term holders and uncertainty about the CLARITY Act are all suppressing market sentiment. Expect volatility to persist until markets get more clear signals from the Federal Reserve and lawmakers. This is the current market environment.

FAQs

Why did the crypto market plummet today?

The crypto market is under pressure as investors price the high probability of a Federal Reserve rate hike on September 16. Higher interest rates often reduce liquidity and make risky assets such as cryptocurrencies less attractive.

Are outflows from Bitcoin ETFs hurting the market?

Yes. The U.S. spot Bitcoin ETF has recorded outflows for four consecutive days, including a redemption of $13.29 million on September 11. Lower ETF demand has reduced one of the largest sources of buying pressure in the market.