Bitfinex Alpha: U.S. stock market performance is crucial to Bitcoin's short-term trend

Bitfinex Alpha reported data that Bitcoin fell 10.7% in the first week of September, continuing a downward trend since the end of August, with the price falling below the key low of $56,711 on May 1. The sell-off has led to a reduction in leveraged positions and the market may be nearing a local bottom. U.S. stock market performance, especially the S&P 500's worst weekly performance since March 2023 last week, will be crucial to Bitcoin's short-term direction. Bitcoin prices’ correlation with traditional financial markets continues, with Bitcoin ETFs seeing significant outflows over the past week, with net outflows reaching $706.1 million since August 27. In contrast, the small currency market has shown resilience. Bitcoin’s share of market capitalization fell by 1.3% last week, while the market capitalization of other crypto assets outside of the top 10 coins increased by 4.4%. The shift suggests investors may be looking for value in smaller coins. However, open interest in smaller coins has also fallen 55% from all-time highs, indicating less speculative sentiment. Analysts believe that if Bitcoin dominance does reach a local peak, the next few months may see smaller coins outperform the broader market, setting the stage for a bull run in the fourth quarter.