Key Takeaways
- Bitcoin’s price plunged to $86,390 on Thursday, a level not seen since April 21.
- The sharp decline is primarily driven by investors moving away from riskier assets amid uncertainty over a potential Federal Reserve rate cut.
- Stronger-than-expected U.S. jobs data has lowered the probability of a December rate cut, fueling market anxiety.
- The drop has intensified negative market sentiment, likely pushing the Crypto Fear & Greed Index further into “fear” territory.
Bitcoin experienced a significant sell-off on Thursday, with its price falling to the lowest level in over six months as macroeconomic concerns spooked investors. The world’s largest cryptocurrency dropped to as low as $86,390 before slightly recovering to trade at $86,965.
The slide reflects a broader risk-off sentiment in the market, as traders weigh the likelihood of another interest rate cut by the Federal Reserve next month.
Economic Data Rattles Markets
A key catalyst for the downturn was the release of stronger-than-expected U.S. jobs data. The economy added 119,000 jobs in September, blowing past the 50,000 consensus estimate from economists polled by Dow Jones.
This robust economic indicator has thrown cold water on expectations for looser monetary policy. According to the CME Group’s FedWatch tool, the probability of a rate cut in December has now fallen to approximately 40%. Typically, higher interest rates make holding speculative assets like Bitcoin less attractive compared to yielding investments.
Fear and Greed Index Signals Anxiety
This sharp price depreciation is expected to have a significant impact on market sentiment. Indicators like the Crypto Fear & Greed Index, which measures investor emotions, will likely shift further towards “Fear” or “Extreme Fear.” Such a reading indicates widespread anxiety among traders, often signaling that a market bottom could be near, though it also reflects the current bearish pressure.
Broader Market Context
Thursday’s pullback is part of a larger downtrend that began in early October following a series of cascading liquidations of highly leveraged crypto positions.
The negative sentiment also spilled over into the stock market. Despite a blockbuster earnings report from Nvidia, stocks also trended lower. Market analysts note that many traders who are heavily invested in AI-related equities also hold significant positions in Bitcoin, creating a correlation that links the two asset classes during periods of volatility.
As investors navigate an uncertain economic landscape, all eyes will remain on the Federal Reserve and upcoming inflation data for clues on the future direction of monetary policy.