Bitcoin’s price has fallen below the $100,000 mark, reaching a five-month low as of Tuesday. This decline reflects a larger trend across the cryptocurrency market, where investors are seemingly stepping back from riskier assets amid the Federal Reserve’s cautious approach to interest rate cuts. The leading cryptocurrency has seen a substantial reduction in its historical gains in recent weeks.
Currently, Bitcoin is priced at approximately $99,780, marking a 6.4% decrease over the past day. This drop brings the cryptocurrency back to levels last observed in June, when it traded below $100,000. In a broader context, Bitcoin has experienced a 12.4% drop over the past week, and it is not alone in its downward trajectory. Other major cryptocurrencies have also suffered significant losses: Ethereum has decreased by 20.8%, XRP has fallen 18%, BNB is down 19.2%, Solana has seen a 22.2% decline, and the popular meme token dogecoin has also dipped by 20.8%.
Just a few weeks ago, Bitcoin reached a new record high of over $126,000 on October 6. However, it has since slipped nearly 11% in anticipation of the Federal Reserve’s decision to cut interest rates by a further quarter-point last week. Fed Chair Jerome Powell has signaled that an additional rate cut in December is not guaranteed, which may be contributing to market uncertainty.
Historically, rising cryptocurrency prices have aligned with the Federal Reserve lowering interest rates, as illustrated by Bitcoin’s ascent during the pandemic. Specifically, it surged from $5,000 in March 2020 to around $69,000 by November 2021. Conversely, when the Fed raised interest rates in 2018, Bitcoin’s value dipped significantly, from approximately $20,000 to about $3,000.
Fed Governor Lisa Cook indicated on Monday that she remains undecided regarding a possible rate cut in December. The opinions of other central bank officials are equally ambiguous, except for Kansas City Fed President Jeffrey Schmid, who advocated against any rate reductions last week.
Interestingly, Bitcoin’s performance this October is on track to be its worst in over a decade, with a reported decrease of 3.7% according to CoinMarketCap data. The cryptocurrency market at large has seen a staggering loss of about $840 billion in value over the past month. The total market capitalization has plummeted from $4.21 trillion on October 5 to approximately $3.36 trillion on Tuesday.
Earlier this year, Bitcoin experienced a meteoric rise, fueled in part by legislative support from the Trump administration aimed at easing regulatory burdens on the crypto market. It broke the $110,000 and $120,000 thresholds in quick succession, partly due to substantial corporate investments. Notably, the Trump Media and Technology Group announced plans to establish a $2.5 billion corporate Bitcoin reserve. Additionally, the U.S. federal government has amassed its own Bitcoin reserve, estimated to be between $15 billion and $20 billion as of August, according to Treasury Secretary Scott Bessent. During the recent federal government shutdown, Bitcoin managed to rise alongside other safe-haven assets, such as gold and silver.
