Bitcoin Falls Below $90,000 as Fed Rate Cut Fails to Boost Crypto Market

TLDR

Table of Contents

Bitcoin falls below $90,000 after struggling with bearish sentiment and weak demand.
The Federal Reserve’s rate cut failed to lift cryptocurrency market confidence.
Bitcoin’s price movement remains volatile as traders face mixed market signals.
Large Bitcoin purchases have not been enough to reverse downward pressure.

Bitcoin has dropped below $90,000 for the first time in two days, signaling renewed concerns over demand for riskier assets. The decline follows the Federal Reserve’s recent interest rate cut, which boosted traditional stocks but failed to lift cryptocurrency prices. As the market faces growing bearish sentiment and mixed signals, Bitcoin’s price could be heading toward further losses, leaving traders uncertain of its next move.

Bitcoin Struggles Below $90,000 After Fed Rate Cut

Bitcoin has dipped below $90,000 after showing signs of volatility in recent trading days. The cryptocurrency, which had been hovering in the range of $85,000 to $95,000 for nearly a month, retreated by as much as 3.4% on Thursday.

This marks the first time in two days that Bitcoin has fallen below this key price point. The drop reflects ongoing concerns in the market regarding demand for riskier assets, particularly within the crypto space.

The downturn comes in the wake of a rate cut by the US Federal Reserve, which lowered interest rates by a quarter percentage point. While this decision led to a brief rally in stock markets, with the S&P 500 gaining 0.7% on Wednesday, it failed to provide the same lift for Bitcoin. This suggests a growing disconnect between traditional equities and the cryptocurrency market.

A Struggling Crypto Market and Bearish Sentiment

The broader cryptocurrency market has faced challenges following a selloff that began in early October. That selloff, triggered by a major liquidation event, wiped out around $19 billion in leveraged positions. Smaller tokens, such as Ether, also saw significant declines, with Ether losing as much as 5.8% of its value.

Alex Kuptsikevich, chief market analyst at FxPro, explained that Bitcoin’s recent price action is testing the strength of an uptrend that had been forming since November 21. A drop below $88,000 could signal the end of this upward momentum and lead to further bearish sentiment. Such a break could indicate that the recovery rally is over, potentially causing more price declines.

Divergence Between Bitcoin and Equities

Despite the rate cut from the Federal Reserve, which boosted US stocks, Bitcoin has not shown a similar rebound. This has led to what some traders are describing as a “clear decoupling” between Bitcoin and traditional equities.

According to Sean McNulty, APAC derivatives trading lead at FalconX, the $85,000 price point for Bitcoin is seen as a critical support level. If Bitcoin drops below this threshold, it may indicate further weakness in the market.

This divergence is especially notable given that Bitcoin-related exchange-traded funds (ETFs) saw a net inflow of $224 million on Wednesday. The largest of these investments came from BlackRock’s iShares Bitcoin Trust, which received $193 million—its largest inflow in the past 30 days.

Even with such positive news, the broader market trend remains downward for Bitcoin, suggesting that demand from institutional investors is not enough to counteract the ongoing market pressures.

The Role of Bitcoin Futures and Trader Sentiment

The decline in Bitcoin’s price is also reflected in the perpetual futures market, which makes up a large portion of crypto trading volume. Funding rates for Bitcoin futures have turned negative during Asian trading hours, indicating a growing bearish sentiment among traders.

This suggests that many are now betting against Bitcoin’s price movement, paying a premium to maintain short positions. The rise in short positions adds to the downward pressure on Bitcoin’s price.

Tony Sycamore, an analyst at IG Australia, noted that Bitcoin’s recent rally from the “capitulation low” of $80,537 is at risk of reversing. Sycamore warns that Bitcoin may retest this lower level in the near future, which could further confirm the market’s bearish outlook.