Top line
The Bitcoin crisis extended Monday as the world’s largest cryptocurrency moved further away from last week’s all-time high, although it remains a banner year for Bitcoin investors.
Bitcoin has struggled since the Fed indicated rates would likely stay higher for longer.
Key facts
Bitcoin fell 2% to just below $93,000 as of 9 p.m. Greenwich Mean Time, or 4 p.m. EST (price movements of the constantly traded crypto token are most often referenced in GMT).
The digital asset is on track to hit its lowest end-of-day price since November 27.
Bitcoin is down 14% from its record high of over $108,000 set last Tuesday, putting it in correction territory for the first time in four months.
Shares of publicly traded crypto companies also struggled on Monday, with Bitcoin whale MicroStrategy down 9%, crypto exchange Coinbase down 4% and the most valuable Bitcoin miner, Marathon Digital, down 4%.
All three of these stocks are down at least 20% from their highs from earlier this month.
Large number
500 billion dollars. That’s about how far the overall market cap of all cryptocurrencies is down from last Monday’s record $3.9 trillion, according to CoinGecko. Bitcoin represents approximately 56% of the overall crypto market, with a market capitalization of $1.9 trillion.
Why is Bitcoin falling?
The recent sell-off coincides with losses in risky financial assets, including stocks, with the S&P 500 down 2% over the past week. The decline was catalyzed by Wednesday’s Federal Reserve meeting, where the U.S. central bank expressed greater concerns about persistent inflation and planned fewer interest rate cuts in 2025 than expected. This is bad news for riskier assets, like cryptocurrencies, because investors tend to keep their money in high-yielding, low-risk government bonds when interest rates are higher. “Monetary easing has almost always favored the price of bitcoin, and the opposite has a negative impact on the price,” Yuya Hasegawa, a crypto market analyst at the Japanese cryptocurrency exchange Bank, wrote Monday in comments sent by email.
Contra
Eyebrow-raising corrections are also very common for bitcoin, which suffered a sell-off of more than 20% this summer and more than 70% from 2021 to 2022 before hitting its all-time high this month. Bitcoin remains massively up in 2024, gaining 120% year to date, up 36% since the election, which brought new crypto bull Donald Trump back to Washington. Other assets that have surged have also taken a breather, including Tesla stock, which is down 12% from its record set last week but is trading more than 70% higher than before the elections.
