On Friday, Bitcoin experienced a significant drop, dipping below $96,000 for the first time in over six months, as traders moved away from risk assets with waning expectations of an interest rate cut next month.
The cryptocurrency fell close to 4%, reaching $95,721.83 by 2:30 p.m. ET, marking its third consecutive week of decline.
Bitcoin, which is the largest cryptocurrency, has seen a nearly 24% decrease from its peak in October.
Despite this, year-to-date, it remains up about 2.7%.
Arthur Azizov, founder and investor at B2 Ventures, noted that when Bitcoin’s price fell below the crucial $100,000 mark, it confirmed a downward trend that had formed since mid-October, especially following a significant liquidation event. He added that the overall economic conditions are also a bit uncertain.
Meanwhile, Ether also saw a decline, falling nearly 2% to $3,169.39.
This week, the federal government reopened after the longest shutdown in history, but the White House indicated that some economic data from October, particularly jobs and inflation reports, might be delayed.
Kevin Hassett, director of the National Economic Council, mentioned that while labor figures will be released eventually, they will not include the unemployment rate. Additionally, Federal Reserve Chairman Jerome Powell stated that there isn’t a consensus among officials regarding a rate cut in December, despite market expectations suggesting a high probability of such a move.
Following news that some economic data could be omitted, which surprised investors who anticipated a quarter-point rate cut, the likelihood of a rate reduction at the December 10 meeting decreased to 45.9%. This represents a 21% drop from the previous week and nearly a 50% decline since October, according to CME FedWatch.
Azizov observed that, until clarity emerges, investors are likely to be cautious about assets like Bitcoin.
Tech stocks faced steep declines in the past two weeks as investors adopted a more risk-averse strategy, although the tech-heavy Nasdaq saw a rebound on Friday.
Regarding Bitcoin, Ken Mahoney, CEO of Mahoney Asset Management, mentioned, “There’s always a chance this drop could be the final shake before a significant rally, but it’s hard to say for sure.” He advised crypto investors to closely monitor the situation, noting that Bitcoin is often a better buy during bearish trends and should be sold during bullish ones if traders are looking to capitalize on fluctuations.
