Despite the Bitcoin price correction cracking under $56,000, the potential interest cut in September could spark a renewed recovery trend.

As Bitcoin’s downtrend continues, the broader market uncertainties grow intense. With a lack of bullish momentum related to increased outflow from U.S.-Based Bitcoin spot ETFs, the bulls anticipate the upcoming Fed cut as the next uptrend catalyst.

Bitcoin Coils Up Momentum Under Pressure

The Bitcoin price is currently trading at $55,499, with a 24-hour drop of 2.5% and a decline of 6.2% over the past seven days. In the daily chart, the BTC price has dropped under the crucial support of $57,500, suggesting the market dynamics are in bearish gear.

With a massive 3.10% drop yesterday, a bearish engulfing candle is visible in the daily chart. This marks the first closing under the $57,000 mark in almost a month.

The intraday candle reveals a 1.3% drop from its opening price of $56,179, as BTC now trades at around $55K. The bearish influence is clearly visible with the 50-day and 200-day EMA ready for a death cross event.

In addition, however, the BTC day price chart projects a bullish flag pattern sustained in the long term, contrasting the ongoing short-term correction phase. The bullish flag pattern maintains a counter-trend move in contrast to the temporary correction phase of BTC.

If the pattern holds, the BTC price decline to $53,500, accounting for a 5.17% drop.

Interest Rates and Job Market Avenue

Amid the short-term bearishness and the increased volatility, the backdrop bullish catalyst of a potential rate cut remains hope for BTC buyers. According to the Chicago Mercantile Exchange FedWatchTool, the probability of a 50-basis point rate cut in September has risen by 41%.

FED Watch Tool

With the lowered interest rates, the increased possibility of a money flow in the market could boost the prices of risky assets like Bitcoin and other cryptocurrencies.

However, the yet-to-come unemployment data, which will reflect the overall health of the labor market, will play a major role in determining the possibility of a rate cut.

A recent tweet from Peter Berezin, Director of Research at BCA Research, draws attention to a concerning trend in the US job market. According to data from Indeed, new job postings have declined significantly, diverging from the relatively stable trend in total job openings.

Berezin highlights the implications of this decline, noting that the job openings rate has fallen to 4.55%, just above the 4.5% threshold mentioned by Fed Governor Christopher Waller. This downward trend in job openings is expected to negatively impact labor demand, ultimately leading to slower economic growth as fewer companies create new positions.

Where is Bitcoin Headed?

Notably, the higher-than-expected unemployment data could prompt the Federal Reserve to implement a 50-basis point rate cut if the current situation persists. In this scenario, a weakening labor market, as reflected by declining job numbers, might signal that the economy needs a boost, triggering this rate-cut event.

On the other hand, lower-than-expected unemployment data would indicate a strong labor market and could result in a more modest 25-basis point rate cut. In either case, the Bitcoin price is expected to rebound from its crucial support levels of $50,000 or $53,500.

In the worst-case scenario, if the rate cuts are delayed, the ongoing correction could potentially lead to fear, uncertainty, and doubt (FUD) in the market, causing the price to fall below the $50,000 psychological mark and potentially hit the $45,000 level.