Bitcoin Falls Below $110,000 Amid Fed Uncertainty and Upcoming Economic Reports

Bitcoin is continuing its decline from the weekend as crucial macroeconomic events approach this week that may affect the U.S. Federal Reserve’s decision on rate cuts in September.

The cryptocurrency dropped 2.8% to $109,882 on Tuesday, with liquidations, mainly from long positions, exceeding $940 million over the last 24 hours, according to CoinGlass data.

“There’s a shift away from risk, and the thin liquidity over the weekend is exacerbating the volatility,” said Rachael Lucas, a crypto analyst at BTC Markets, to Decrypt.

This recent downturn has brought Bitcoin below $110,800, which represents the average cost basis for investors who bought the leading cryptocurrency within the last three months.

“Historically, falling below this level has often been a precursor to prolonged market weakness and potentially significant corrections,” warned Glassnode in a statement on X on Tuesday.

The market’s fluctuations come in the wake of U.S. President Donald Trump’s dismissal of Federal Reserve Governor Lisa Cook.

The letter of resignation shared on TruthSocial after trading hours mentioned “deceptive and possibly illegal conduct” concerning allegations she falsified documents regarding her primary residence.

The news caused investor concern, resulting in a 1% decline in the U.S. dollar index before it rebounded to 98.32. Major U.S. futures also fell by a quarter percent.

“Markets perceive that this action does not benefit American businesses,” commented Justin Wolfers, an economics professor at the University of Michigan, via X.

“This is precarious. This decision favors Trump, but not the nation,” Wolfers added. “Our economy faces risks when the President undermines the Fed,” he stated.

Attention is now directed towards the revised Q2 GDP figures expected this Thursday, with economists predicting a slight upward adjustment to 3.1% from the initial 3% estimate.

At the same time, the year-over-year core PCE inflation, which monitors changes in consumer spending, is anticipated to reveal a re-acceleration of inflation, moving from 2.8% to 2.9%, per MarketWatch data.

However, a downturn in growth along with an unexpected increase in inflation could disrupt the Fed’s plans for next month, including future rate cuts this year, as previously stated to Decrypt.