Overnight crypto gains once again evaporated by U.S. morning hours as bitcoin BTC$101.727,63 tumbled back below $102,000 on Wednesday.
Briefly topping $105,000 earlier today, the largest crypto nosedived 3% in just a couple hours as U.S. traditional markets opened. It wasn’t just bitcoin; ether ETH$3.431,64 fell almost 5% below $3,400 during the same period, while Solana SOL$153,62, XRP$2,3488 and other altcoin majors suffered similar declines.
Crypto-related U.S. stocks are also taking a beating in the early session. USDC stablecoin issuer Circle (CRCL) dropped 9.5% after its third quarter earnings, while crypto miners with data center ambitions including Bitfarms (BITF), Bitdeer (BTDR), Cipher Mining (CIFR), Hive Digital (HIVE), Hut 8 (HUT) and IREN continued selling off, down 5%-10%.
Weak U.S. appetite for bitcoin
Lackluster price action during U.S. trading hours has been a staple for the past few weeks now on crypto markets. Showcasing the weak American investor appetite is the so-called Coinbase Premium, a popular gauge for U.S. investor demand, which has been negative since late October.
Bitcoin’s Coinbase Premium Index is having its weakest streak since April correction. (CryptoQuant)
The Coinbase Premium measures the price difference for spot BTC on Coinbase, widely used crypto exchange by U.S. customers and many institutional market participants, compared to prices on Binance, the leading exchange by trading volume that’s popular among offshore retail users.
That’s the metric’s longest negative streak since March-April, when BTC fell to $75,000 from above $100,000 in a market-wide correction.
Fed divided on rate cuts
The shift in U.S. sentiment coincides with growing uncertainty around the Federal Reserve’s next move since the central bank’s October meeting. What had been widely assumed before the meeting to be a straightforward path to another rate cut in December, has now turned into an internal battle among policymakers.
According to a recent Wall Street Journal report, the central bank is facing an internal divide, with policymakers split over whether the greater risk now is persistent inflation or a softening labor market. That division has left the path to a December rate cut far less clear than it appeared just weeks ago.
The recent government shutdown, which temporarily froze key employment and inflation data releases, has only widened that divide by forcing policymakers to lean on private data and anecdotes, the report said.
A December cut is now a “tossup,” the report said, and even deciding on lowering rates could come with guidance of higher bar for further reductions.
Since the Fed’s October meeting, U.S.-listed spot bitcoin ETFs saw more than $1.8 billion in net outflows, pointing to that uncertainty around the Fed’s move, and the lack of clear positive catalysts, is keeping BTC on edge.
