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Bitcoin's price continued its downward spiral on Monday morning, plunging to its lowest point in seven months. This recent slide extends a week-long sell-off, driven largely by concerns over escalating geopolitical tensions sparked by US President Trump's Liberation Day plan, which many fear could ignite a global trade war. The world's leading cryptocurrency dropped sharply, losing 9 percent over the past five days, and hit a new low of $93,043, down significantly from its previous highs near $142,362.
Investors are also jittery about the upcoming Federal Reserve meeting scheduled for December 10. There had been widespread expectations that the Fed would cut interest rates to boost the economy, but recent signals have thrown that into doubt. Cameron Gleeson, a senior investment strategist at Betashares, explained that the uncertainty surrounding the Fed's rate decision has triggered selling pressure. "People thought the US Fed cutting (rates in December) was a foregone conclusion, but now it’s unclear, so that’s prompted some selling," Gleeson noted. Additionally, a broader risk-off sentiment is gripping markets, pushing investors to dump riskier assets like Bitcoin.
Despite the recent losses, Bitcoin has still managed to rally about 30 percent since Trump's election victory on November 5, 2024. His administration's pro-crypto stance, including moves to deregulate the cryptocurrency sector, has been a positive factor, especially given the financial interests of Trump's family in this space. However, the recent sharp declines have been exacerbated by significant institutional outflows. Last week alone, crypto markets witnessed a record $1.8 billion net outflow from exchange-traded funds (ETFs), including the largest single-day withdrawal from Blackrock's flagship Bitcoin ETF, according to Rachel Lucas, a strategist at BTC Markets.
Lucas also pointed out that Bitcoin's price has slipped below important technical levels associated with its moving average, triggering algorithmic trading systems to unload positions. "So, it’s a perfect storm of institutional outflows and technical stress," she said. On top of that, wider macroeconomic conditions are far from supportive, with persistent inflation and delayed interest rate cuts adding to market pressures. The ripple effect has been felt across other major cryptocurrencies such as Ethereum, Solana, and XRP, which have tumbled alongside Bitcoin. Lucas remarked, "Bitcoin tends to move the whole market and the other coins move in lockstep with it."
Historically, Bitcoin’s price movements have often mirrored Wall Street’s trends. However, as of Monday morning, US share futures remained flat, indicating some decoupling or lag in these correlations. The confluence of geopolitical risks, unclear monetary policy, institutional selling, and technical indicators has created a challenging environment for cryptocurrency investors, making near-term recovery uncertain.
Looking ahead, market participants are closely watching the Federal Reserve's policy meeting for clues on future interest rate decisions, and whether these could stabilize or further disrupt the crypto markets. Until then, Bitcoin and other digital assets may continue to experience volatility, as both retail and institutional investors reassess their risk exposures amid these unsettled conditions.
