Bitcoin's price correction is driven by a weakening global economy, conflict in the Middle East, and concerns over an AI bubble.
Bitcoin (BTC) price declined by 4.1% in the early hours of Sept. 30, retesting the $63,500 support level and erasing the gains from the previous five days. The recent attempt to surpass $66,000 lasted less than three days, but the correction only resulted in under $40 million in leveraged long futures being liquidated. This data suggests that bulls were not caught off guard, though the factors driving the downturn remain present.
Stock market futures in the United States slipped 0.20% as investors awaited US Federal Reserve Chair Jerome Powell’s comments on the economic outlook. Concerns are rising about the activity in the services and manufacturing sectors and the upcoming September jobs report on Oct. 4. Bank of America US economist Aditya Bhave wrote in a note to clients on Sept. 27 that "The labor market is the biggest risk to our outlook," according to Yahoo Finance.
Given Bitcoin's high short-term correlation with the stock market, traders believe that a slowdown in the S&P 500 could negatively affect BTC price. Some analysts argue that a potential bubble in the artificial intelligence (AI) sector could trigger market panic, leading investors to shift toward safe-haven assets such as short-term government bonds and cash.
