Bitcoin experiences a sudden drop below $56,000 before regaining stability.

Overnight, the stock price slid back towards $55,000, mirroring Tuesday's broader market sell-off.

On Wednesday, the flagship cryptocurrency's price decreased by 2% to $56,589.80, as reported by Coin Metrics. It had dropped significantly on Tuesday night, reaching a low of $55,673.80, before stabilizing during Asia-Pacific trading.

On Tuesday, U.S. tech stocks faced difficulties in trading, marking their worst day since September 2022. Meanwhile, two manufacturing production readings indicated signs of weakness, causing concerns about the economy's health. In Japan, the Nikkei 225 and the broad-based Topix both experienced their worst one-day loss since the Aug. 5 sell-off on Wednesday.

During big market days in the U.S., bitcoin's movements are sometimes less pronounced than stocks'. James Davies, co-founder of crypto trading platform Crypto Valley Exchange, stated that traders respond "more dynamically" to macro events during Asia trading hours.

"The US crypto market accounts for approximately 30% of global trading volume, with institutional activity, particularly in derivatives like CME futures, driving the majority of this activity. In contrast, the Asian market accounts for nearly 50% of global trading volume and is more retail-focused. As a result, during Asian trading hours, bitcoin tends to be more reactive to global financial movements, such as stock market shifts."

Bitcoin faced challenges in August, and its poor trading may continue for another month. Analysts predict that the cryptocurrency could drop to $50,000 in September as traders await clarity on U.S. interest rate cuts and the upcoming presidential election.

Historically, September has been the worst month for bitcoin, with the coin finishing higher in only three of the past 11 Septembers and experiencing an average loss of 4.8% during this month, according to CoinGlass.