- Bitcoin has crashed more than 30% from its October peak.
- ETF selling hit $3.8 billion with nine days left in November, approaching February liquidations.
- The macro picture has turned hostile after Fed governors signal no December cut.
Bitcoin plunged to $81,900 on Friday, wiping out Thursday’s bounce and further extending a month-long selloff that has erased more than $1.4 trillion from the cryptocurrency markets.
Bitcoin is trading more than 30% below its October all-time high, and the overall crypto market is under $3 trillion.
And analysts warn that the carnage may get worse.
Citrini Research warned in a note to investors shared with DL News that risk-off sentiment will continue to hit speculative assets such as crypto into mid-December.
Why?
Because the investors are still dealing with the fallout from the longest US government shutdown in history, which could “unleash volatility” in the market.
‘If BTC is decoupling from its programmed cadence, I think the market could be mispricing both upside potential and downside risk.’
— Robert Le, head of research at Kiln
Market mispricing risk
A toxic cocktail is hammering risk appetite across crypto and stocks.
Wall Street posted its sharpest intraday reversal in years, Nvidia’s rally fizzled, and new macroeconomic data is fuelling fears that the US Federal Reserve may postpone rate cuts.
Adding to the confusion is Bitcoin’s four-year cycle, an expected price movement pattern tied to the top crypto’s quadrennial halving event when rewards to miners validating the blockchain are cut by half.
A growing chorus of analysts says that institutional adoption of digital assets has made that narrative obsolete.
“If BTC is decoupling from its programmed cadence, I think the market could be mispricing both upside potential and downside risk,” Robert Le, head of research at Kiln, told DL News.
And investors are becoming skittish. Total liquidations over the past 24 hours hit $2 billion.
Investors pulled $548 million from Bitcoin exchange-traded funds on Thursday, bringing November’s outflows to $3.77 billion, DefiLlama data shows.
BlackRock clients led the nosedive, dumping $355 million from the flagship iShares Bitcoin Trust, which has been the worst month for ETFs this year since February.
Macro turns hostile
Bitcoin’s tumble below $82,000 comes on the back of Thursday’s long-awaited release of September’s jobs report, the first major data since the end of the government shutdown, which did little to reassure investors.
The Bureau of Labour Statistics said the US economy added 119,000 jobs, well above the 51,000 expected, while unemployment ticked up to 4.4%.
The stronger-than-expected hiring, combined with skyrocketing employment, left something for both dovish and hawkish Federal Reserve reps to consider as they’re set to discuss interest rates in December.
Lower interest rate cuts are usually bullish for riskier assets like digital assets and tech stocks, as it incentivises investors to bet on them.
To some, mixed data further fogged up the interest-rate outlook and added to the narrative spun by White House that the Federal Reserve is ‘flying blind’ after weeks without key data.
Meanwhile, cracks within the Fed are widening.
Philadelphia Fed President Anna Paulson warned, “I am approaching the December FOMC cautiously. Each rate cut raises the bar for the next cut,” Bloomberg reported.
And Paulson isn’t the only decision maker signalling no rate cut to investors. Fed Governor Michael Barr added fresh hawkish pressure, saying “I am concerned that we’re seeing inflation still at around 3%… we need to be careful and cautious.”
The CME FedWatch tool now assigns roughly 35% odds to a December rate cut, down sharply from earlier this month. Bettors on Polymarket are even less optimistic, at 31%.
Not just crypto
The US stock market also suffered its worst whipsaw in months, Bloomberg reported.
The Nasdaq plunged 2.1% by Thursday’s close. The S&P 500 fell 1.5%, while the Dow shed 380 points. Nvidia, which surged more than 5% early in the Thursday trading session on another blockbuster earnings beat, finished 3.1% lower as AI-bubble fears resurfaced.
The S&P 500’s 3% intraday reversal was the largest since April’s Trump tariff turmoil. Analysts argued that even Nvidia’s defiant numbers couldn’t offset deepening valuation concerns across the AI complex.
Crypto market movers
- Bitcoin is down 10.8% over the past 24 hours, trading at $82,018.
- Ethereum is down 10.9% over the past 24 hours, trading at $2,700.
What we’re reading
- Korean bank worker steals $700,000 to buy crypto — loses the lot — DL News
- Is this the secretive team behind $40bn Solana ‘dark’ exchange HumidiFi? — DL News
- White House Considers Bid to Tax Crypto Held in Foreign Accounts — Unchained
- Crypto Is Crashing… Why the Bull Case Is Still Alive w/ Matt Hougan & Ryan Rasmussen — Milk Road
- Crypto, prediction markets dominate CFTC nominee hearing — DL News
Lance Datskoluo is DL News’ Europe-based markets correspondent. Got a tip? Email at lance@dlnews.com.