Bitcoin sinks to lowest level in six months as risk fears rise

Post by : Saif

Bitcoin fell sharply on Friday and touched its lowest level in six months as investors stayed away from risky assets. The drop came at a time when hopes for a U.S. interest rate cut in December have become much weaker. This sudden change in market mood has affected not only Bitcoin, but also the entire cryptocurrency market and global stocks.

During early afternoon trading, Bitcoin was down 2.3% at $96,564, after briefly falling to $95,885, its lowest level since May 7. Ether, the second-largest cryptocurrency, also slipped to a 10-day low, though it later traded flat at around $3,175.

Market experts say this latest fall shows that Bitcoin is now in a bear market, which means it has dropped more than 20% from its recent high. Dave Rosenberg, a well-known market analyst, said that Bitcoin’s fall has been quick and deep, happening in just a little over a month. He also noted that exchange-traded funds (ETFs) saw $870 million in withdrawals on Thursday, showing that many investors are pulling their money out.

The overall crypto market has lost about $1 trillion in value in recent days. This signals a sharp change in investor confidence.

A big reason behind this downturn is the growing belief that the Federal Reserve may not cut interest rates in December. Just weeks ago, markets were almost certain a rate cut was coming. But after several U.S. central bank officials spoke publicly about their concerns, expectations dropped sharply. The chance of a December rate cut has now fallen to just 40%, compared to 90% earlier this month.

Kansas City Federal Reserve President Jeffrey Schmid added to these concerns when he said that inflation was still “too hot,” and that he was not convinced more easing was the right move for now.

Bitcoin and other cryptocurrencies often rise when investors feel confident about the economy and when interest rates are low. But when fear increases, and when people expect interest rates to stay high, they tend to move away from risky assets like crypto.

Juan Perez, a trading director at Monex USA, explained that Bitcoin does not act like a safe asset during uncertain times. He said that Bitcoin usually performs well when the stock market is strong. But when people stop taking risks, they also lose interest in Bitcoin.

Selling pressure eased slightly in U.S. stock markets later in the day, but the mood remains tense. Investors are waiting for a large amount of U.S. economic data, which will be released next week after the government reopened following a record 43-day shutdown.

For now, the cryptocurrency market remains under stress as traders prepare for more possible volatility. Many long-term Bitcoin holders are also taking profits, according to data firm Glassnode, which adds further pressure on prices.

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