When Bitcoin dipped under $100,000 early last week, some in the crypto world thought it couldn’t get any worse. It did. As of Friday mid-day, Bitcoin was trading at below $97,000 for the first time since May and is down about 22% since its all-time high of about $126,000 just last month.
Ethereum and Solana, two other major cryptocurrencies known as altcoins, have also sputtered. The former is down about 3% in the last week to about $3,236, and the latter is down about 12% to just under $142 during that time.
The crypto market’s dip comes amid sentiment that a December rate cut from the Federal Reserve is growing less likely. Lower interest rates are typically a spur for crypto speculation.
The crypto sector has experienced a rough first half of November, continuing the downward trend which started during the flash crash of October 10.
“This is clearly triggered by macro risk adjusting on the back of a more hawkish Fed stance and a vacuum in macro data of inflation and jobs,” said Jasper De Maere, desk strategist at Wintermute. “[The] probability of 25 basis points rate cuts in December dropped from 70% only three days ago to around 50% today, leading to a rebalancing of risk.”
Bitcoin has been especially volatile in the last six weeks. The beginning of ‘Uptober’ was true to its moniker, as Bitcoin crossed the $125,000 threshold for the first time in its history. Its downward spiral began on October 10, the day where traders saw $19 billion in their positions evaporate. That only worsened when Federal Reserve Chair Jerome Powell expressed doubt about another rate cut at the end of the year. That doubt has only magnified since, as this week Fed policymakers have echoed Powell’s caution.
The recent crypto boom has been spurred in large part by the favorable regulatory policies from President Donald Trump’s administration. But the last month has erased much of those winnings for the sector, and the darkness might linger, according to some analysts.
“The crypto market has set lower local lows, confirming the downward trend,” said Alex Kuptsikevich, chief market analyst at FxPro. “The bearish signal – the death cross – is already looming over the first cryptocurrency.”
