Bitcoin Crashes Below $95K as Fed Rate-Cut Hopes Evaporate

• Bitcoin (BTC) plummeted below $95,000 on Friday, printing 7.71% lower at $94,985 and marking its lowest level since early May, amid a broader sell-off in risk assets driven by fading expectations for a Federal Reserve rate cut in December.
• The $1.89T market cap cryptocurrency is poised for its third straight weekly decline, having lost nearly 25% from its October 6 peak of $126,198,07 while Bitcoin ETFs experienced net outflows of $870 million on Thursday – the second-largest since their launch.
• Ether (ETH) fell 10.77% to $3,113.29, reflecting sector-wide volatility as markets now price in only a 50% chance of a December rate cut, down sharply from 90% earlier in the month, amid cautious Fed signals and delayed economic data.

Bitcoin’s (BTC) sharp decline below $95,000 marks a significant reversal for the cryptocurrency market, underscoring the heightened sensitivity of digital assets to macroeconomic shifts. On Friday, the asset traded at $94,985, reflecting a 7.71% drop, with intraday lows reaching $94,563.18 – the weakest level since early May. This pullback extends a broader trend, positioning Bitcoin for its third consecutive weekly loss and erasing nearly 25% of its value from the $126,198, 07 peak achieved on October 6.

The downturn aligns with intensifying pressures across risk assets, fueled by diminishing prospects for monetary easing from the U.S. Federal Reserve. Investors now assign roughly a 50% probability to a December rate cut, a stark reduction from the 90% odds prevailing earlier this month and the just over 60% implied earlier this week. This recalibration stems from signals among Fed policymakers favoring a more cautious approach to further stimulus, amid concerns over persistent inflation and robust economic indicators. The delay in key data releases, compounded by the recent resolution of the government shutdown, has amplified uncertainty, eroding the brief equity rebound that followed and cascading into speculative sectors like cryptocurrencies.

Compounding the strain, Bitcoin exchange-traded funds recorded net outflows of approximately $870 million on Thursday, the second-highest daily redemption since their introduction. These vehicles, which have amassed substantial inflows during prior bull phases, now reflect waning institutional enthusiasm as higher-for-longer interest rates diminish the appeal of yield-starved alternatives. Ether (ETH), the second-largest cryptocurrency by market capitalization – $374 billion as of last check – mirrored this volatility, sliding 10.77% to $3,113.29, highlighting correlated risks within the sector.

From a historical perspective, such episodes echo patterns observed during prior tightening cycles, where Bitcoin’s correlation with equities has strengthened, often amplifying drawdowns in high-beta environments. The asset’s role as a store of value has been tested, particularly as regulatory clarity remains elusive and geopolitical tensions linger. Yet, underlying network fundamentals – bolstered by institutional adoption and halvings – continue to support long-term resilience, even as short-term sentiment sours. For market participants, this juncture demands vigilance on Fed communications and inflation metrics, which could dictate whether the current correction evolves into a deeper retracement or a prelude to renewed accumulation.

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