When Bitcoin fell below $100,000 early last week, some in the crypto world thought the situation couldn’t get worse. This is what happened. As of midday Friday, Bitcoin was trading below $97,000 for the first time since May and was down about 22% since its all-time high of around $126,000 last month.
Ethereum and Solana, two other major cryptocurrencies known as altcoins, also failed. The former is down about 3% over the past week to around $3,236, and the latter is down about 12% to just under $142 during that time.
The crypto market decline comes amid sentiment that a December Federal Reserve interest rate cut is increasingly unlikely. Lower interest rates are usually an incentive for crypto speculation.
The crypto sector had a difficult first half of November, continuing the downward trend that began during the October 10 flash crash.
“This is clearly triggered by a macro risk adjustment based on a more hawkish Fed stance and a gap in macro data on inflation and employment,” said Jasper De Maere, desk strategist at Wintermute. “(The) probability of a 25 basis point rate cut in December has fallen from 70% just three days ago to around 50% today, leading to a rebalancing of risk.”
Bitcoin has been particularly volatile over the past six weeks. The start of “Uptober” was true to its nickname, as Bitcoin crossed the $125,000 threshold for the first time in its history. Its downward spiral began on October 10, the day traders saw $19 billion of their positions evaporate. The situation only got worse when Federal Reserve Chairman Jerome Powell expressed doubts about further rate cuts at the end of the year. That doubt has only grown since then, as Fed policymakers this week echoed Powell’s caution.
The recent crypto boom has been driven largely by favorable regulatory policies from President Donald Trump’s administration. But the past month has erased much of those gains for the sector, and the darkness may persist, some analysts say.
“The crypto market has established lower local lows, confirming the downtrend,” said Alex Kuptsikevich, chief market analyst at FxPro. “The bearish signal – the death cross – is already looming on the leading cryptocurrency.”
