Overnight crypto gains evaporated again in the morning hours in the US in the form of bitcoin fell back below $102,000 on Wednesday.
Briefly surpassing $105,000 earlier today, the largest cryptocurrency plunged 3% in just a few hours as traditional US markets opened. It wasn’t just about Bitcoin; ether fell almost 5% below $3,400 during the same period, while Solana , and other altcoin majors suffered similar declines.
US crypto-related stocks also took a beating in early trading. USDC stablecoin issuer Circle (CRCL) fell 9.5% after its third-quarter results, while crypto miners with data center ambitions including Bitfarms (BITF), Bitdeer (BTDR), Cipher Mining (CIFR), Hive Digital (HIVE), Hut 8 (HUT), and IREN continued to sell off, down 5-10%.
Weak US appetite for bitcoin
Lackluster price action during U.S. trading hours has become a fixture in recent weeks in crypto markets. The weak appetite of US investors is illustrated by the so-called Coinbase Premium, a popular indicator of US investor demand, which has been negative since the end of October.
The Coinbase Premium measures the difference in the price of spot BTC on Coinbase, a crypto exchange widely used by U.S. customers and many institutional market participants, compared to prices on Binance, the leading exchange by trading volume and popular among offshore retail users.
This is the metric’s longest negative streak since March-April, when BTC fell to $75,000 from over $100,000 during a market-wide correction.
The Fed divided on rate cuts
The change in sentiment in the United States coincides with growing uncertainty over the Federal Reserve’s next move since the central bank’s October meeting. What was widely seen before the meeting as 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 divided over whether the bigger risk now is persistent inflation or a slowing labor market. This division has made the path to a December rate cut much less clear than it seemed just a few weeks ago.
The recent government shutdown, which temporarily froze key publications on employment and inflation, has only widened this divide by forcing policymakers to rely on private data and anecdotes, the report said.
A December cut is now a no-brainer, the report said, and even the decision to cut rates could come with a higher bar for further cuts.
Since the Fed’s October meeting, U.S.-listed spot bitcoin ETFs have seen net outflows of more than $1.8 billion, showing that uncertainty surrounding the Fed’s decision and lack of clear positive catalysts are keeping BTC on edge.
