Topline
Bitcoin’s slump continued on Monday as the world’s largest cryptocurrency continues to retreat from last week’s all-time high, although it is still a banner year for Bitcoin investors.
Bitcoin has struggled as the Fed has indicated that interest rates are likely to remain higher for longer.
Important facts
Bitcoin fell 2% to just under $93,000 by 8:00 p.m. Greenwich Mean Time, or 3:00 p.m. EST (price movements for the constantly traded crypto token are most commonly reported in GMT).
The digital asset is on track for its lowest end-of-day price since November 27th.
Bitcoin is down 14% from its record of over $108,000 set last Tuesday, putting it in correction territory for the first time in four months.
Shares of publicly traded crypto companies also struggled on Monday: Bitcoin whale MicroStrategy fell 8%, crypto exchange Coinbase fell 5% and the most valuable Bitcoin miner, Marathon Digital, lost 4%.
All three of these stocks are down at least 20% from their highs earlier this month.
Big number
500 billion dollars. According to CoinGecko, the total market capitalization of all cryptocurrencies has fallen by approximately that amount from last Monday’s record $3.9 trillion. Bitcoin accounts for about 56% of the total crypto market with a market capitalization of $1.9 trillion.
Why is Bitcoin in the red?
The recent selloff coincides with losses in risk-on financial assets, including stocks, as the S&P 500 fell 2% last week. The declines were triggered by Wednesday’s Federal Reserve meeting, where the US central bank expressed greater concerns about persistent inflation and forecast fewer interest rate cuts in 2025 than previously forecast. This is bad news for riskier assets like cryptocurrencies, as when interest rates are higher, investors tend to keep their money in high-yield, low-risk government bonds. “Monetary policy easing has almost always benefited the price of Bitcoin, and the opposite has had a negative impact on the price,” Yuya Hasegawa, crypto market analyst at Japanese crypto exchange Bitbank, wrote in emailed comments on Monday.
Cons
High-profile corrections are also very common in Bitcoin, which saw a sell-off of more than 20% this summer and a sell-off of more than 70% in 2021-2022 before hitting its all-time high this month. Bitcoin remains soaring in 2024, gaining 120% year-to-date, up 36% since the election that brought new crypto bull Donald Trump back to Washington. Other assets that soared have also taken a breather, including Tesla shares, which are down 12% from their record high last week but are trading more than 70% higher than before the election.
