Bitcoin Plummets to Six-Month Low Amid Fed Rate Cut Uncertainty

UPDATE: Bitcoin has plunged to a six-month low, trading around $95,000 this morning, following renewed uncertainty about potential interest rate cuts from the Federal Reserve in December. The cryptocurrency, which reached a staggering high of $126,251 on October 6, has dropped nearly 25% in recent weeks, signaling a significant shift in market sentiment.

Traders are reacting to mixed signals from Federal Reserve officials regarding interest rates. Fed Chair Jerome Powell has indicated that “a further reduction in the policy rate at the December meeting is not a foregone conclusion — far from it.” Additionally, Susan Collins, President of the Boston Fed, emphasized the need to maintain current rates to balance inflation and employment risks in this volatile climate.

As of Monday, the probability of a rate cut at the upcoming meeting has fallen to 43%, a decrease of over 10% since last week, according to the CME FedWatch tool. Analysts are warning that the Fed’s recent shift towards a more hawkish stance could lead to further sell-offs in the crypto market.

Experts believe institutional investors are driving the market downturn, with approximately $1.8 billion pulled from Bitcoin and Ethereum exchange-traded funds (ETFs) last week alone. On Thursday, the outflows from Bitcoin-related products reached nearly $870 million, highlighting a clear risk-off sentiment among large investors.

The drop in Bitcoin prices comes as investor confidence in President Donald Trump‘s attempts to position the U.S. as the “crypto capital of the world” wanes. Trump’s recent threat of an additional 100% tariff on Chinese imports has escalated fears, triggering significant liquidations across major cryptocurrencies.

Stephen Innes, an analyst at SPI Asset Management, noted, “a month after its euphoric highs, Bitcoin’s Trump-trade sugar rush faded.” He suggested that the cryptocurrency market currently feels like a passenger rather than a driver, as it waits for fresh U.S. economic data that could influence the Fed’s decision.

As the market continues to react to these developments, investors are advised to monitor upcoming economic indicators closely. The uncertainty surrounding interest rates and inflation will play a crucial role in shaping the cryptocurrency landscape in the coming weeks.

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