'Overbought' Bitcoin (BTC) Drops Below $64K as ISM Manufacturing Data Looms: 10x Research

The U.S. data, due Tuesday, has triggered 10% price drops in the first week of the past three months, 10x Research said.

Bitcoin (BTC) encountered selling pressure during the European morning Monday, a move that could be linked to the upcoming U.S. data, which has led to 10% price drops in the first week of the past three months, according to 10x Research.

The world’s largest cryptocurrency dropped nearly 3% on Monday to $63,600, according to CoinDesk. The move breached support of a bullish trendline that marked the rally from the Sept. 6 low of $52,600 to last week's highs around $66,500, data showed.

Futures tied to the S&P 500 were seen little changed at record highs and the dollar index was flat at 100.30.

Bitcoin’s pullback could be a typical bull-market move after overbought conditions, 10x Research noted.

“In last week's report, we briefly noted that BTC appears to be overbought in the short term, as reflected by the heightened levels of the Greed & Fear index,” Markus Thielen, founder of 10x Research, told CoinDesk in a chat. "Current short-term reversal signals have turned bearish, indicating that a pullback is likely over the next few days."

Thielen added that since June, the first week of the month – when U.S. ISM Manufacturing data is released – has been characterized by 10% price sell-offs. The latest decline is consistent with that pattern.

The September report will be released Tuesday and is expected to show that manufacturing activity continued to contract in the final month of the third quarter, FXStreet reported.

“The ISM Manufacturing New Orders data shows forward-looking indicators have fallen to near-recession levels. This makes tomorrow's data highly uncertain—if the reading falls below 48.0, it could prompt another Bitcoin drop, while a higher number might fuel a rally,” Thielen said in a note to clients, maintaining a bullish outlook for the fourth quarter.

Optimism about the fourth quarter is driven by expectations that the Federal Reserve will announce another 50 basis-point cut in interest rates and China's recent announcement of a large stimulus measure.

The market may get a clue about the Fed's plans later Monday, as Powell is set to speak on the economy at the National Association for Business Economics annual meeting in Tennessee.

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