Bitcoin Crashes as Fed Rate Cut Hopes Fade: Is Your Portfolio Ready?

Reviewed By

Satyam Jha | Whalesbook News Team

Detailed Coverage:

Bitcoin and the broader cryptocurrency market experienced a sharp downturn, with most losses occurring during U.S. trading hours. Following a recent pattern, Bitcoin, after reaching highs of $104,000 overnight, reversed course, falling below $100,000 and showing a more than 1% loss in the past 24 hours. This retreat coincided with a significant decline across risk assets, as investors reassess the likelihood of the U.S. Federal Reserve implementing interest rate cuts in December. Major U.S. stock indices like the Nasdaq and S&P 500 also saw substantial drops. Crypto-related equities were particularly hard-hit, especially companies involved in AI infrastructure and data centers. Bitdeer (BTDR) plunged 19%, Bitfarms (BITF) fell 13%, and Cipher Mining (CIFR) and IREN dropped over 10%. Other crypto equities like Galaxy (GLXY), Bullish (BLSH), Gemini (GEMI), and Robinhood (HOOD) saw losses between 7% and 8%. This trend highlights the current strong correlation between crypto markets and macroeconomic factors, specifically Federal Reserve monetary policy.

Impact: This news can impact Indian investors by influencing their risk appetite and potential diversification into crypto or crypto-linked assets. A broad decline in risk assets globally can sometimes spill over into emerging markets, though direct correlation varies. The sentiment shift regarding U.S. interest rates also affects global liquidity, which can indirectly affect Indian markets.

Impact Rating: 6/10

Difficult Terms: Risk Assets: Investments that carry a higher degree of risk and are expected to offer higher returns, such as stocks, cryptocurrencies, and commodities. Federal Reserve (Fed): The central banking system of the United States, responsible for monetary policy. Interest Rate Cuts: A reduction in the benchmark interest rate set by a central bank, intended to stimulate economic activity by making borrowing cheaper. Basis Points: A unit of measure used in finance to denote the percentage change in a financial instrument or market. One basis point is equal to 0.01% (1/100th of a percent). Correlation: A statistical measure that describes the extent to which two variables change together.