Bitcoin Drags Crypto Market After 15% Slump From Record High: What's Behind The Downturn?—Explained

Bitcoin has plunged to around $107,000, nearly 15% from its all-time high levels, dragging broader crypto markets lower and souring sentiment among traders and investors. The latest slide is being tied to the Federal Reserve's cautious stance following its interest-rate decision last week.

While the Fed cut rates and signaled plans to end quantitative tightening by December, Fed Chair Jerome Powell made it clear that another cut in December was not guaranteed.

Data from the CME FedWatch Tool shows expectations for a December cut fell from 90% to 63% after the comment, and January odds dropped to 19.5%, sparking broad selling across risk assets including crypto, especially Bitcoin.

Coinglass warns that Bitcoin risks sliding to $88,000 if it fails to stay above the $113,000 resistance level, which represents the cost basis for short-term holders. For the first time in seven months, inflows into Bitcoin have also dropped below the pace at which new coins are mined, according to Charles Edwards of Capriole Investments.

"The market will have to first show that a convincing bottom in price is near before making a fresh attempt at breaking upwards," said Jordi Alexander, CEO of Selini Capital to Bloomberg, describing the crypto market as being in a "hangover phase."

Others say the current weakness isn't easily explained.

"I view this as somewhat of a puzzling correction," said Matthew Kimmell, digital asset analyst at CoinShares. Kimmell noted that previously inactive Bitcoin wallets have begun moving coins, likely contributing to selling pressure.

Investors are also booking profits after a long rally, according to Jake Hanley of Teucrium ETFs. "Prices have been trending lower… this price is just telling you that folks are taking profits," Hanley told the news agency.

With few upside triggers in November, Bitcoin could remain range-bound between $107,500 and $123,000, as per TradingView. Economic uncertainty in the US may keep volatility high. Yet, the report adds that optimism may return if the Fed ends quantitative tightening, opening the door for a "Santa Rally" in December.