Bitcoin, the world’s largest cryptocurrency by market value, experienced a decline of 1.59% to $93,684 at 4:21 p.m. ET on Sunday. However, it rebounded to $95,050 at 7:29 AM WAT on Monday. This volatility comes after Bitcoin crashed to its lowest level in six months on Friday, amid a broad sell-off in risk assets. The sell-off was sparked by fading hopes that the Federal Reserve will cut US interest rates at its upcoming policy meeting.
The likelihood of a December rate cut has decreased, with markets now pricing in about a 40% chance, down from 90% earlier this month and 60% last week. The decline in US equities eased slightly ahead of the weekend, but investors remain cautious as they await a slew of economic data next week following the government’s reopening after a record 43-day shutdown.
The crypto market has been under pressure in recent days as expectations of a Fed rate cut have diminished, with several policymakers indicating a preference to hold off on easing. Since peaking on October 7, the crypto market capitalization has fallen by over $1 trillion, or 24%. Analysts note that the backdrop for Bitcoin remains bearish, with investors worried that the Federal Reserve may not cut interest rates in December and that AI-related stocks have become overvalued.
Long-term Bitcoin holders have accelerated profit-taking, with 815,000 Bitcoin sold over the past 30 days, a record high since January 2024, according to CryptoQuant. This trend suggests that investors are becoming increasingly risk-averse, leading to a decrease in demand for cryptocurrencies. The decline in Bitcoin’s value has significant implications for the broader crypto market, which has experienced a substantial decline in recent months.
As the Federal Reserve’s policy meeting approaches, investors will be closely watching for any indications of a potential rate cut. The outcome of this meeting will likely have a significant impact on the crypto market, with a rate cut potentially leading to an increase in demand for risk assets, including cryptocurrencies. Conversely, a decision to hold off on easing could lead to further declines in the crypto market. With the crypto market remaining highly volatile, investors will need to closely monitor market trends and economic indicators to make informed decisions.