The apex cryptocurrency was down over 9% at $83,555.42 at the time of writing, as per CoinMarketCap data. Ethereum crashed 10% to $2,727.16, XRP dipped 9.1% to $1.93.
- Digital asset prices have been pressured by a growingly hawkish Fed, whose officials have repeatedly expressed their concerns over inflation.
- Tom Lee, the chairman of Ethereum treasury firm BitMine, said the Oct. 10 liquidation event, which wiped out billions, might have burned deep holes in market makers’ balance sheets.
- “Adding fuel to the fire, Ray Dalio’s recent comments over quantum computing potentially cracking Bitcoin’s encryption within 10-15 years, sparking a fresh wave of liquidation.” — IG analyst, Tony Sycamore.
Bitcoin prices fell in early trading on Friday, continuing a downward slump, as hopes of a Federal Reserve interest rate cut diminished further after a stronger-than-expected jobs report.
The apex cryptocurrency was down over 9% at $83,555.42 at the time of writing, as per CoinMarketCap data. Ethereum crashed 10% to $2,727.16, XRP dipped 9.1% to $1.93. Among other tokens, BNB was down 8.6%, Solana declined 10.5%, and Dogecoin fell 10.7%.
What Is Weighing On Bitcoin Prices?
Digital asset prices have been pressured by a growingly hawkish Fed, whose officials have repeatedly expressed their concerns over inflation. On Thursday, the Bureau of Labor Statistics reported that the U.S. economy added 119,000 jobs in September, well above expectations of 50,000. However, the unemployment rate also rose to 4.4%, the highest since 2021.
Despite inflation remaining above the Fed’s 2% target, the dovish camp at the U.S. central bank was advocating a rate cut, citing labor-market weakness. According to CME Group’s FedWatch tool, only 36% traders expect a rate cut after the next Federal Open Market Committee meeting in December, compared with over 98% a month earlier.
“The failure to hold and bounce from support in the low $90’s and the subsequent acceleration lower has increased the chances that a deeper decline is underway back towards the Liberation Day lows $75k area,” IG analyst Tony Sycamore said in a post on X.
Tom Lee Suggests Liquidity Concerns Holding Back Cryptos
Tom Lee, the chairman of Ethereum treasury firm BitMine, said the Oct. 10 liquidation event, which wiped out billions, might have burned deep holes in market makers’ balance sheets, contributing to the recent pressure on cryptocurrencies.
“If they’ve got a hole in their balance sheet that they need to raise capital, they need to reflexively reduce their balance sheet, reduce trading. And if prices fall, they’ve got to then do more selling. So I think that this drip that’s been taking place for the last few weeks in crypto reflects this market maker crippling,” he said.
Sycamore also agreed. “It is possible that the October flash crash dislocated market-making functions, leaving liquidity still fragile and contributing to heightened volatility. Adding fuel to the fire, Ray Dalio’s recent comments over quantum computing potentially cracking Bitcoin’s encryption within 10-15 years, sparking a fresh wave of liquidation.”
What Are Stocktwits Users Thinking?
Retail sentiment on Stocktwits about Bitcoin was in the ‘bearish’ territory at the time of writing.
“There is absolutely nothing natural about this. This is my 3rd cycle, and even in the worst of the bear markets, it did not behave this way,” one trader said.
“When I bought BTC in 2020 at $5,300 a coin, I never even fathomed shorts would be trying to roast longs at $85,000 a coin,” another trader said.
Bitcoin has fallen by over 8.5% this year, compared with spot gold’s 53.4% gains.
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