Source: CNN, Businessinsider
Written by: John Towfighi, Jennifer Sor
Compiled by: Deloris
Bitcoin and the stock market are experiencing significant volatility—and investors say there could be more turbulence ahead.
Since hitting a record high in late October, the tech-heavy Nasdaq index has fallen 6.6%, wiping out approximately $2.6 trillion in market capitalization during the decline. The Wall Street fear gauge, the VIX, surged 10% on Tuesday. CNN's Fear & Greed Index is hovering in the "Extreme Fear" zone and has fallen to its lowest level since early April.
"Bitcoin is struggling partly due to selling pressure from long-term holders taking profits, and partly due to uncertainty surrounding Federal Reserve policy, liquidity conditions, and other macroeconomic factors," said Gerry O'Shea, Global Head of Market Insights at Hashdex Asset Management.
Compounding the issue, uncertainty over whether the Federal Reserve will cut interest rates next month is fueling risk-off sentiment, which is putting pressure on highly speculative and volatile assets like Bitcoin. Carolane De Palmas, an analyst at ActivTrades, said that if the Fed cuts rates less than expected—a scenario investors are already pricing in—it would be negative news for risk assets like Bitcoin.
"Bitcoin's pullback is part of a broader shift in risk sentiment," said Haider Rafique, Global Managing Partner at cryptocurrency exchange OKX.
In fact, Bitcoin has struggled to stage a substantial recovery since the flash crash on October 11th, triggered by US President Trump reigniting the trade war with China. Peter Chung, Head of Presto Research, said that since then, some buyers and sellers have exited the market, leading to reduced Bitcoin liquidity and making prices more susceptible to sharp swings.
The reason is investor optimism about the Trump administration introducing crypto-friendly regulations. Trump is a strong supporter of the cryptocurrency industry, advocating for deregulation and pro-crypto legislation. The "GENIUS Act," passed by Congress, was signed into law by Trump in July, ushering in a new era for stablecoin regulation.
Against this backdrop, despite pressure on tech stocks, investors have been buying the dip. Nvidia's stock fell as much as 3.36% on Friday before closing up 1.77%. On Monday, Nvidia's stock fell as much as 3.08% before closing down 1.88%.
Some cryptocurrency investors remain optimistic. Bitcoin fell to a low of around $74,500 in April but surged to over $126,000 in early October.
BitMEX co-founder Arthur Hayes is even more bullish, suggesting Bitcoin could first drop to the $80,000 to $85,000 range before rising to $200,000 to $250,000 by year-end.
She wrote in a report on Monday that if Bitcoin closes below that threshold for two consecutive weeks, it would "signal a worrisome crash."
This is the story of a platform that shut down due to financial difficulties. Its founders, Skirmantas Januškas and Dragos Dunica, stated, "In the current environment, operating a platform of this scale is no longer economically viable."
Currently, Bitcoin is trading at $91,398, and ETH is at $3,075.
