Bitcoin's price has plummeted to its lowest level since October 23, defying conventional expectations that interest rate cuts by the Fed...
Bitcoin's price has plummeted to its lowest level since October 23, defying conventional expectations that interest rate cuts by the Federal Reserve should bolster risk assets like cryptocurrency. The crash is attributed to a "sell the news" reaction compounded by a less-than-dovish Fed announcement.
The Federal Reserve delivered its second consecutive interest rate cut of 0.25%, a move already priced into the market by over 98% of traders. As a result, investors who had bought in anticipation of the announcement immediately sold off their holdings once the expected event occurred.
Adding to the downside pressure, Fed Chair Jerome Powell's statement suggested a more hawkish outlook than anticipated by not guaranteeing a rate cut in December. This unexpected caution caused the odds of a further December cut to drop significantly, driving down both the stock market and Bitcoin.
The price slide was exacerbated by rising liquidations, which exceeded $483 million within 24 hours. A liquidation occurs when leveraged crypto trades are automatically closed by exchanges, accelerating the market downturn. Furthermore, spot Bitcoin ETFs experienced significant outflows, shedding over $470 million, with Fidelity's FBTC, Ark Invest's ARKB, and BlackRock’s IBIT seeing the largest asset losses.
Technically, the price rejection at the $116,370 level and the looming formation of a Death Cross pattern—where the 50-day and 200-day moving averages intersect—suggest potential for further downside correction, possibly pushing the price to the $100,000 mark or below.
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