Bitcoin Crashes Below $68,000 And The Fed Could Keep It Down Until Christmas

Bitcoin crashed below $68,000 on Friday, down 6.6% in a day and 45% from its record, and the reasons behind the fall point to more pain at least until the Federal Reserve’s Dec. 9 rate decision.

Key Takeaways

• Bitcoin traded near $68,670 after hitting a 24-hour low around $68,060, its weakest in nearly three months
• The Fed is raising rates again, and markets put a December hike at about 90% after hot October inflation
• Spot Bitcoin ETFs lost about $1.14 billion in four trading days, and about $1.6 billion of bets on higher prices were wiped out
• Fathom’s read is that Bitcoin stays under pressure into the Dec. 9 decision, with the August low near $62,800 as the next big test

The drop came a day after Jensen Huang‘s sudden exit from Nvidia rattled tech stocks. But Nvidia only lit the fuse. Four bigger forces have been pushing Bitcoin lower for weeks, and none of them goes away soon.

Also Read: Bitcoin Sinks To Lowest Since August After Jensen Huang Quits Nvidia, And Friday Could Make It Worse

Where Bitcoin Stands Now

Force 1: The Fed Is Raising Rates Again

Under Chair Kevin Warsh, the Fed raised rates by a quarter point in September and held them at 3.75% to 4.00% in October, with two officials voting for another hike. Then October consumer prices jumped 0.4% in a month, above forecasts, driven by food and energy.

Fed Governor Christopher Waller has said a quarter-point move alone could put the Fed’s “credibility at risk,” and Dallas Fed President Lorie Logan backs at least two more hikes. Futures traders now price about a 90% chance of a December increase and about 10% for a half point.

Higher rates hurt Bitcoin because it pays no interest. When cash and bonds pay more, the cost of holding a coin that only rises if someone pays more for it goes up.

Force 2: War-Driven Energy Costs And 5% Bond Yields

The Iran war has kept fuel and food prices high. Waller said shipping insurance and ship-to-ship oil transfers are adding $20 to $30 a barrel to crude. That keeps inflation sticky, which keeps the Fed hiking.

The 10-year US Treasury yield is back at 5% and the dollar has strengthened. A risk-free 5% is tough competition for any asset with no income, and a strong dollar usually drains money from risk assets worldwide.

Force 3: Wall Street Money Is Walking Out

US spot Bitcoin ETFs lost about $1.14 billion between Nov. 5 and Nov. 10, and BlackRock’s IBIT logged eight straight days of outflows totaling about $1.73 billion since Oct. 30. These funds were the biggest buyers of the last rally, so their selling removes the market’s main support.

Leverage made Friday’s fall worse. About $1.6 billion of crypto trades were forcibly closed in a day, and roughly 90% of them were bets that prices would rise. Each forced sale pushed the price down further and triggered the next.

Force 4: The AI Trade Is Wobbling

Big investors hold Bitcoin and AI stocks in the same risk bucket. Huang’s resignation sent Nvidia down as much as 14% on Thursday before it closed 4.34% lower, and Nvidia’s results on Nov. 17 will be its first test without him.

The Dates That Decide The Next Move

So How Long Can The Fall Last?

All four forces lead back to one question: how much higher the Fed takes rates. That answer arrives when the Fed meets on Dec. 8 and 9, and every data release before then can push Bitcoin either way. Until then, sellers have the upper hand.

The first level to watch is the August low near $62,840, about 8.5% below Friday’s price. If that breaks, there is little support until $60,000. Past Bitcoin bear markets fell about 75% to 80% from their peaks, but this cycle, with ETFs holding a large share of supply, has so far fallen 45%, and nothing guarantees it follows the old pattern.

A real turn would need three things together: cooler inflation data, a Fed signal that December’s hike is the last one, and ETF buyers coming back. Fathom’s read is that Bitcoin is likely to stay under pressure, roughly between $62,800 and $75,000, until the Dec. 9 decision, with a lasting recovery more likely after it than before. This is analysis, not financial advice.

Read Next: Bitcoin ETFs Lose $366M In A Day, Taking Weekly Outflows To $1.47B