Bitcoin (BTC) encountered selling pressure during the European morning session, mirroring past price drops before the release of crucial U.S. economic reports, according to CoinDesk. The leading cryptocurrency fell nearly 3% on Monday, reaching $63,600 and breaking a bullish trendline that had supported its rise from the September 6 low of $52,600 to last week’s peak around $66,500. This trend was highlighted by data from CoinDesk and TradingView. In contrast, S&P 500 futures remained close to record highs, while the dollar index held steady at 100.30.

This decline is viewed as a typical pullback in a bull market following overbought conditions, as noted by 10x Research. Markus Thielen, founder of 10x Research, remarked that Bitcoin appeared overbought in the short term, as indicated by the high levels of the Greed & Fear index. He mentioned that recent reversal signals have turned bearish, implying a potential further decline in the coming days. Thielen also pointed out that the first week of the month, when U.S. ISM Manufacturing data is released, has historically seen price sell-offs of around 10% since June, and this latest drop fits that trend.

The ISM Manufacturing report for September, set to be released on Tuesday, is anticipated to show ongoing contraction in manufacturing activity for the final month of the third quarter, according to FXStreet. Thielen highlighted that the ISM Manufacturing New Orders data suggests forward-looking indicators have fallen to near-recession levels, creating uncertainty around the upcoming report. A reading below 48.0 could lead to another dip in Bitcoin’s price, while a stronger figure might trigger a rally. Despite the bearish short-term signals, Thielen remains optimistic for the fourth quarter, fueled by expectations of a 50 basis-point interest rate cut by the Federal Reserve and significant stimulus measures announced by China.

Market observers will likely gain additional insights into the Federal Reserve’s strategy later today, as Fed Chair Powell is scheduled to address economic issues at the National Association for Business Economics annual meeting in Tennessee.