- Bitcoin dropped sharply to US$110,833 after briefly reaching US$115,870 early Tuesday, despite the Federal Reserve’s 25 basis point rate reduction.
- Fed Chair Powell signalled no December rate cut is guaranteed, citing “strongly differing views” within the committee about future policy direction.
- Analysts at Glassnode warned that Bitcoin’s struggle above the US$113k level indicates weakening demand and potential further declines toward US$88k.
- Institutional investors sold US$382.6 million from spot Bitcoin ETFs on Wednesday, breaking a four-day buying streak and signalling reduced conviction among large players.
After reaching US$115,870 (AU$175,817) in the early hours of Tuesday Australian time, Bitcoin has sharply corrected and is currently trading at US$110,833 (AU$168,174). The downward move comes despite the US Federal Reserve cutting interest rates by 25 basis points – a move usually bullish for crypto.
In a statement, the Federal Open Market Committee (FOMC) explained that “available indicators suggest that economic activity has been expanding at a moderate pace”, adding that the US job market has cooled and unemployment has increased, though it “remained low through August”, while inflation has risen.
Inflation has moved up since earlier in the year and remains somewhat elevated.
Federal Open Market Committee
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Powell Hints December Cut Not Guaranteed
Additionally, Fed Chair Jerome Powell dampened hopes for a December cut, saying there were “strongly differing views about how to proceed in December.”
A further reduction in the policy rate at the December meeting is not a foregone conclusion – far from it.
Jerome Powell, Fed ChairMatt Mena, an analyst at 21Shares, said the move was “fully priced in” and expected by market participants. Regardless of the current price performance, Mena said 21Shares remains “moderately risk-on”, adding that the firm sees “a credible path for Bitcoin to break its all-time high before year-end”, partly based on historical performance:
November has historically been one of Bitcoin’s best-performing months, with positive returns in eight of the past 12 years, averaging 46.02%.
Matt Mena, 21SharesHowever, analysts at Glassnode said the “struggle below key cost-basis levels” shows “fading demand and continued long-term holder distribution”, which could cause further drawdowns:
The market continues to struggle above the short-term holders’ cost basis (~$113K), a critical battleground between bull and bear momentum. Failure to reclaim this level raises the risk of a deeper retracement toward the Active Investors’ Realized Price (~$88K).
GlassnodeThe analysts wrote in a recent report that short-term investors are closing positions at a loss, suggesting declining conviction. The recent fall in market uncertainty implies cautious optimism, though stability remains fragile and dependent on the Federal Reserve’s next policy moves, they added.
ETFs Show Outflows as Caution Builds
Institutional interest has also dipped, with the latest data for US spot Bitcoin exchange-traded funds (ETFs) showing renewed selling. On Wednesday, US$382.6 million (AU$580.71 million) exited the funds, ending a four-day streak of US$462.6 million (AU$702.1 million) in inflows over those days.
Despite this, the US ETFs still hold 6.4% of all BTC, while global Bitcoin funds account for 7.3%, making them the largest group of HODLers.
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