Doubts Over Rate Cut Send Crypto Markets Lower

Crypto markets declined this week, with Bitcoin briefly falling below $95,000 after a significant day of outflows from Bitcoin ETFs. The downturn reflects growing concerns over the timing of potential interest rate cuts by the Federal Reserve. US equities also experienced selling pressure, with the Nasdaq and S&P 500 down 1.74% and 1.37%, respectively.

Federal Reserve officials are signaling caution, particularly given the lack of recent economic data due to the government shutdown. Minneapolis Fed President Neel Kashkari recently stated he opposed the last interest rate cut and remains undecided regarding next month’s policy meeting. Market expectations of a December rate cut have sharply decreased, with the CME FedWatch Tool now pricing it at a 51% probability, a significant drop from 63% the day prior and over 95% a month ago.

Bitcoin ETFs have been heavily impacted by the macroeconomic uncertainty, experiencing their second-worst day ever for net flows. Yesterday, ETFs saw nearly $870 million in outflows, suggesting a third consecutive week of negative flows. A similar period of outflows earlier this year saw Bitcoin fall below $80,000.

Grayscale, a major ETF issuer, filed for an IPO yesterday, revealing a 20% year-over-year revenue decline for the first nine months of the year. Despite an 80% increase in Bitcoin’s price during that same period, assets under management were lower than a year prior. Since their launch in 2024, Grayscale’s GBTC has seen nearly $25 billion in cumulative net outflows.

Across the broader crypto sector, every tracked index except Real World Assets (RWA) finished the day in negative territory. The worst-performing indices were Crypto Miners (-6.6%), Solana Eco (-5.9%), and Crypto Equities (-5.8%). The performance of crypto equities reinforces the broader risk-off sentiment driven by macroeconomic concerns.

Disclaimer: What is written here is not investment advice. Cryptocurrency investments are high-risk investments. Every investment decision is under the individual’s own responsibility.