Bitcoin fell to its lowest level in six months yesterday. This happened because a lot of people were selling risk assets, and hopes that the Federal Reserve will decrease U.S. interest rates at its next policy meeting were diminishing.
Markets currently think there is a 40% likelihood of a rate drop in December. This is down from 90% at the start of the month and just over 60% earlier this week.
Bitcoin, the biggest cryptocurrency in the world, was last down 2.3% at $96,564 in early afternoon trade. It had previously plunged to $95,885.33, its lowest level since May 7.
Ether, the second-largest cryptocurrency, was last at $3,175.22, which was the same as it was earlier in the day. It had dropped to a 10-day low.
However, selling in U.S. stocks slowed down a bit in the afternoon before the weekend. Investors were still on edge, though, because they were getting ready for a lot of economic data next week after the government reopened after a record 43-day shutdown, according to Reuters.
In the last several days, risky assets have been under pressure as the number of policymakers who have said they want to wait before easing has grown, which has made expectations of a rate cut from the Fed next month lower.
The total value of all cryptocurrencies has dropped by more than $1 trillion, or 24%, since it reached its highest point on October 7.
Analysts noted that the background for bitcoin is still gloomy.
In the last few days, investors have been anxious that the Federal Reserve might not lower rates in December and that equities tied to A.I. have grown excessively expensive.
According to the crypto analytics company Glassnode, people who have held onto their bitcoins for a long time are selling them faster. CryptoQuant, another company that studies digital assets, says that these long-term bitcoin holders have sold 815,000 bitcoin in the last 30 days, which is the most since January 2024.
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