Crypto markets bleed $182bn amidst Fed uncertainty

Crypto markets plunged almost 5% on Monday, shaving about $182 billion of the total market’s value as Bitcoin fell to $105,540.

Both the overall market and the main cryptocurrency have recovered slightly. They are now worth $3.6 trillion and $107,149, respectively.

While it’s unclear what triggered this latest sharp decline, it comes on the back of US Federal Reserve Chair Jerome Powell signalling last week that a December interest rate cut is not a foregone conclusion.

This “dampened investors’ expectations for looser financial conditions going forward in the short-term,” Simon Peters, crypto analyst at trading platform eToro, said in comments shared with DL News on Monday.

He noted that, leading up to last Wednesday’s interest rate decision, the market’s probability of a cut at December’s FOMC meeting stood as high as 96%.

“After the press conference this dropped drastically to less than 70% chance,” Peters said.

The dramatic drop on Monday also liquidated over $1 billion across over 303,000 positions, according to CoinGlass.

The dip comes on the back of traders on Bitcoin exchange-traded funds selling $800 million worth of their assets last week, DefiLlama data shows.

To be sure, there are still pockets of bullishness in the market.

Peters pointed to key employment data that is expected to be released on Wednesday.

“Signs of a weakening labour market could reinforce expectations for a rate cut and restore ‘risk-on’ sentiment in crypto markets,” he said.

Similarly, Fundstrat’s Tom Lee told CNBC that while Bitcoin is still consolidating after the October 10 crash, he expects it to rally by year end, fuelled by the growing stablecoin boom.

David Brickell and Chris Mills, analysts at the London Crypto Club, wrote on Sunday that they expect a surge in liquidity over the coming weeks to propel Bitcoin to “reconnect to the broader risk picture” and “retest record highs.”

Eric Johansson is DL News managing editor. Got a tip? Email ateric@dlnews.com.