Bitcoin has experienced a significant decline, falling for the fourth consecutive day, with the price dropping as low as $94,491.22 early on Friday. This downward trend has resulted in a nearly 9% loss for the cryptocurrency over the week, as reported by CNBC.
The drop in Bitcoin’s value has been linked to a sell-off by investors, particularly influenced by a downturn in major technology stocks. Many individuals who invest in these tech stocks also have stakes in Bitcoin, creating a tight correlation between the two markets. The tech sector has faced pressures recently due to concerns regarding how companies are managing their expenditures on artificial intelligence initiatives.
In October, Bitcoin reached an all-time high of $125,000, but just days later, the market witnessed a staggering liquidation event described as the largest in crypto history, which was triggered by a surprise tariff announcement from the White House. Since then, Bitcoin has struggled to maintain upward momentum. Earlier in the week, on November 10, the cryptocurrency briefly rose above $107,000 before falling back under the $105,000 mark.
Coindesk highlighted that Friday’s dip marked Bitcoin’s lowest price since May and noted that the recent 9% decrease represents the worst performance for the cryptocurrency in eight months. Analysts have pointed to the recent government shutdown, which lasted from October 1 to November 13, as a contributing factor to the uncertainty in the markets. The suspension of inflation and job data releases created a fog of ambiguity regarding monetary policy direction.
The Wall Street Journal noted that Bitcoin has experienced a 25% drop since its peak in October. This report identified investor concerns over diminishing expectations regarding a potential interest rate cut by the Federal Reserve in December as a key factor in the cryptocurrency’s decline. Notably, both institutional and individual investors have been liquidating their positions at unprecedented rates, with early Bitcoin holders cashing out at the highest levels since January 2024.
Further reporting from Reuters highlighted that not just Bitcoin, but all risk assets, have recently faced pressure due to changing sentiments around interest rate cuts by the Federal Reserve. Current markets are pricing in a mere 40% chance of a December rate cut, dramatically reduced from about 90% at the beginning of the month and around 60% earlier this week. This shift has added to the volatility and uncertainty surrounding Bitcoin and other cryptocurrencies.
