Why Bitcoin is Down: Fed Uncertainty Drives Sharp Drop to Six-Month Low
Bitcoin tumbled to levels not seen since April,
reflecting a broader pullback from riskier assets as investors digested strong
U.S. jobs data.The slide comes amid uncertainty over whether the
Federal Reserve will cut interest rates next month, adding pressure on both
crypto and equities markets.
Digital assets meet tradfi in London at the fmls25
Crypto Retreat Tied to Economic Data
Bitcoin fell to $86,270 on Thursday, marking its lowest level in over six months. Analysts attribute
the decline to a mix of economic signals and market sentiment shifting away
from riskier investments.
The release of U.S. employment figures for September
showed the economy added 119,000 jobs, significantly above the 50,000 expected
by economists polled by Dow Jones.
The stronger-than-expected data has cast doubt on the
likelihood of the Fed cutting its benchmark rate in December. According to the
CME Group’s FedWatch tool, the probability of a rate reduction now sits around
40%.
Ripple Effects Across Markets
The drop in Bitcoin also coincided with declines in
the stock market, despite a standout earnings report from Nvidia. Traders who
invest heavily in AI-related stocks often hold Bitcoin, linking movements in
crypto and equities.
“Crypto is suffering from heavy selling by whales who
follow the four-year cycle narrative, and this is typically the point in that
cycle where prices fall,” James Butterfill, Head of Research at
CoinShares, told Bloomberg.
“While we don’t subscribe to this view from a fundamentals
perspective, it has become somewhat self-fulfilling, with large holders selling
more than US$20 billion since September.”
Continue reading: This New Dogecoin Price Prediction Shows 40% Crash Risk to $0.095 And DOGE Death Cross
Bitcoin has struggled to recover since the October 10 flash crash triggered by President Donald Trump’s renewed trade tensions with China. According to Peter Chung, head of Presto Research, some buyers and sellers exited the market after the drop, reducing order activity and making the price more vulnerable to volatility.
Bitcoin’s recent weakness is also part of a longer
trend. Early October saw cascading liquidations of highly leveraged crypto
positions, which set the stage for ongoing volatility. These liquidations have
left the market more sensitive to external factors, including macroeconomic
reports and Fed policy signals.
Notably, US-listed spot Bitcoin ETFs broke a five-day
streak of heavy outflows on Nov. 19, drawing $75 million in net inflows, according to Farside Investors. The
shift followed a week in which redemptions had exceeded $2 billion, adding
pressure to an already fragile market.
BlackRock’s iShares Bitcoin Trust led the recovery
with $60.6 million in inflows, accounting for the bulk of the day’s positive
activity. Fidelity’s FBTC posted $21.4 million in outflows, while smaller
products including ARKB, BTCO and BRRR saw no net movement.
This article was written by Jared Kirui at www.financemagnates.com.
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