Market Performance:
- Bitcoin (BTC) fell 2.8% to $96,009, dropping as low as $95,885, its lowest level since May 7, 2025.
- Ether (ETH) declined 1.5% to $3,133.76.
- Bitcoin is down ~24% from its early October peak, marking the third consecutive weekly decline.
Drivers of the Sell-Off:
- Risk-Off Sentiment: Investors are selling risky assets, including cryptocurrencies, amid uncertainty over U.S. economic conditions.
- Fed Rate-Cut Expectations Fade:
- Markets now price in a 50% chance of a December rate cut, down from ~90% earlier this month.
- Multiple Fed officials have expressed caution about easing, reducing the likelihood of lower borrowing costs.
Implications:
- Higher Borrowing Costs: If the Fed does not cut rates, crypto assets may remain less attractive compared to interest-bearing investments like bonds or savings accounts.
- Market Volatility: Cryptocurrencies are likely to experience continued swings as investors adjust to changing expectations around monetary policy.
- Investor Sentiment: Persistent declines may weigh on confidence, potentially prompting further rotation away from digital assets toward safer assets.