Why Bitcoin is Down: Fed Uncertainty Drives Sharp Drop to Six-Month Low

Bitcoin tumbled to levels not seen since April, reflecting a broader pullback from riskier assets as investors digested strong U.S. jobs data.The slide comes amid uncertainty over whether the Federal Reserve will cut interest rates next month, adding pressure on both crypto and equities markets.

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Crypto Retreat Tied to Economic Data

Bitcoin fell to $86,270 on Thursday, marking its lowest level in over six months. Analysts attribute the decline to a mix of economic signals and market sentiment shifting away from riskier investments.

The release of U.S. employment figures for September showed the economy added 119,000 jobs, significantly above the 50,000 expected by economists polled by Dow Jones.

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The stronger-than-expected data has cast doubt on the likelihood of the Fed cutting its benchmark rate in December. According to the CME Group’s FedWatch tool, the probability of a rate reduction now sits around 40%.

Ripple Effects Across Markets

The drop in Bitcoin also coincided with declines in the stock market, despite a standout earnings report from Nvidia. Traders who invest heavily in AI-related stocks often hold Bitcoin, linking movements in crypto and equities.

“Crypto is suffering from heavy selling by whales who follow the four-year cycle narrative, and this is typically the point in that cycle where prices fall,” James Butterfill, Head of Research at CoinShares, told Bloomberg.

“While we don’t subscribe to this view from a fundamentals perspective, it has become somewhat self-fulfilling, with large holders selling more than US$20 billion since September.”

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Bitcoin has struggled to recover since the October 10 flash crash triggered by President Donald Trump’s renewed trade tensions with China. According to Peter Chung, head of Presto Research, some buyers and sellers exited the market after the drop, reducing order activity and making the price more vulnerable to volatility.

Bitcoin’s recent weakness is also part of a longer trend. Early October saw cascading liquidations of highly leveraged crypto positions, which set the stage for ongoing volatility. These liquidations have left the market more sensitive to external factors, including macroeconomic reports and Fed policy signals.

Notably, US-listed spot Bitcoin ETFs broke a five-day streak of heavy outflows on Nov. 19, drawing $75 million in net inflows, according to Farside Investors. The shift followed a week in which redemptions had exceeded $2 billion, adding pressure to an already fragile market.

BlackRock’s iShares Bitcoin Trust led the recovery with $60.6 million in inflows, accounting for the bulk of the day’s positive activity. Fidelity’s FBTC posted $21.4 million in outflows, while smaller products including ARKB, BTCO and BRRR saw no net movement.