Bitcoin has fallen sharply, dropping under $100,000 per bitcoin to hit its lowest level since May—and fueling fears a bitcoin price crash nightmare could be coming true.
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The bitcoin price has struggled to regain momentum since hitting an all-time high in October, dropping 20% to plunge bitcoin into bear market territory (even as JPMorgan reveals a huge bitcoin bet).
Now, as traders brace for U.S. president Donald Trump to deliver a bitcoin price shock, analysts are scrambling to decode what the data blackout might mean for the coming Federal Reserve interest rate meeting.
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Federal Reserve chair Jerome Powell is stuck in a data blindspot ahead of the December interest rate meeting, with uncertainty piling pressure on the bitcoin price.
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“Today was supposed to see the delayed release of the U.S. CPI report from October, but instead it appears the government shutdown has created a black hole in the flow of federal data that may never get repaired,” Nic Puckrin, crypto analyst and co-founder of The Coin Bureau, said in emailed comments.
The Fed restarted its interest rate cutting cycle in September after putting it on hold due to fears Trump’s trade tariffs could drive up inflation, delivering two consecutive interest rate cuts but leaving markets clamouring for more.
“This is the worst outcome from the point of view of policymakers—it’s tantamount to walking a tightrope with a blindfold on,” Puckrin said. “So it’s no wonder we’ve seen the odds of a December rate cut fall sharply, with just over half of market participants expecting lower rates come December 10, according to the CME’s FedWatch tool.”
Yesterday, it was revealed economic reports for October may not ever be released because of the government shutdown.
“The Democrat shutdown made it extraordinarily difficult for economic economists investors and policy makers at the Federal Reserve to receive critical government data,” press secretary Karoline Leavitt said in comments reported by CNBC.
However, National Economic Council Director Kevin Hassett told Bloomberg that the delayed jobs data for last month will be partially released.
Earlier this week, Goldman Sachs analysts warned the U.S. may have seen the biggest decline in jobs since late 2020 as the Fed trawls for data ahead of its December interest rate meeting—which had been hoped to reigite the bitcoin price bull run.
“Without a clear indication of how the economy is doing, investors may jump to worst-case scenarios,” Puckrin added. “So, as the most uncertain FOMC meeting of the year looms, we could see a further flight to safety and defensive assets. Traders would do well to stay on their toes in the next few weeks, especially if they’re allocating to high-risk assets like bitcoin.”
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The bitcoin price has dropped sharply, setting off panic that the bitcoin price could see a full-blown crash.
Forbes Digital Assets
Meanwhile, the bitcoin and crypto fear and greed index, a measure of market sentiment, has fallen sharply to “extreme fear” over the last week, dropping by almost 10 points over the last 24 hours alone.
“The cryptocurrency fear index has fallen to 15, its lowest level since 4 March,” Alex Kuptsikevich, FxPro chief market analyst, said in emailed comments and warning it could be an “alarming” signal of things to come.
“Notably, the cryptocurrency market has been left out of the recent rally in precious metals and stock indices. If this is not an attempt by whales to lock in profits from the rally since April or even from the growth of the last two years, then it is an alarming signal of deep-seated risk aversion that is about to manifest itself in larger markets.”