Crypto markets are looking grim, and traders worry it will only get worse from here.
After Bitcoin’s price fell below $82,000 on Friday, analysts suggest collapsing prices threaten to unearth further industry weaknesses.
Think Terra’s collapse culminating with the implosion of FTX, and you get the idea.
“Collapses can be swift and brutal — as 2021 to 2022 illustrated — and some traders worry we’re due for a repeat,” crypto analysts Molly White wrote in her newsletter on November 19.
Bearish move
There are several factors behind the bearish move.
Chief among them is uncertainty caused by the longest-running government shutdown in US history.
Though economic data on employment were eventually published this week, the Federal Reserve remains divided on whether or not to cut interest rates.
That uncertainty is reflected in expectations of a rate cut next month.
On Thursday, CME Group’s Fed Watch tool indicated the chances of a cut were roughly 40%. Today, that’s jumped to 74%. A month ago, that figure was at 98%.
Rate cuts usually incentivise investors to bet on riskier assets like cryptocurrencies.