Headline
Major Decline in Cryptocurrencies: Bitcoin Drops 14% as Post-Election Enthusiasm Wanes
Bitcoin's downslide persisted on Monday, pushing it farther away from last week's record high, although it's still been a prosperous year for Bitcoin investors.
Essential Details
Bitcoin dipped 2% to just above $92,800 by 8 p.m. Greenwich Mean Time or 3 p.m. EST (cryptocurrency's price movements for the continuously traded token are generally measured in GMT).
The digital asset is heading towards its lowest daily closing price since November 27.
Bitcoin has plummeted 14% from its record of over $108,000 achieved last Tuesday, pushing it into correction territory for the first time in four months.
Shares of publicly traded crypto companies also underperformed on Monday, with Bitcoin whale MicroStrategy decreasing by 8%, crypto exchange Coinbase losing 5% and the most prominent Bitcoin miner, Marathon Digital, dropping by 4%.
All three of these stocks have depreciated at least 20% from their peaks earlier this month.
Noteworthy Number
Approximately $500 billion. This represents the approximate decrease in the total market capitalization of all cryptocurrencies since last Monday's record $3.9 trillion, as per CoinGecko. Bitcoin accounts for about 56% of the overall crypto market with a market cap of $1.9 trillion.
Why is Bitcoin Dropping?
The recent selling pressure coincides with losses in risk-focused financial assets, including stocks, as the S&P 500 has declined by 2% over the past week. The catalyst for these declines was the Federal Reserve's meeting on Wednesday, wherein the U.S. central bank expressed heightened concerns about persisting inflation and forecasted fewer 2025 interest rate cuts than previously anticipated. This is unfavorable news for riskier assets, like crypto, as investors tend to allocate funds to high-yielding, low-risk government bonds when interest rates are high. “Monetary easing has generally been beneficial for the price of Bitcoin, and the opposite leads to a decrease in its price,” Yuya Hasegawa, crypto market analyst at Japanese crypto exchange bitbank, commented via email on Monday.
Counterpoint
Noteworthy corrections are also quite common for Bitcoin, which had suffered more than 20% selloff this summer and more than 70% from 2021 to 2022 before reaching its all-time high this month. Bitcoin has seen massive growth in 2024, rising by 120% year-to-date, increasing 36% since the election, which re-introduced a newfound crypto enthusiast into the political sphere in the form of Donald Trump. Other assets that experienced a surge, like Tesla stock, have also taken a break, dropping 12% from its latest record high set last week but continuing to trade over 70% higher than it did prior to the election.
- Despite the 2% dip in Bitcoin's price to $92,800, surpassing $100,000 per BTC still made 2021 a prosperous year for investors, with Bitcoin's price tag hovering around $btc.
- Analysts attribute Bitcoin's recent price drop to the selling pressure coinciding with losses in risk-focused financial assets, such as stocks, following the Federal Reserve's announcement of higher interest rate concerns and fewer 2025 rate cuts than previously anticipated.
- The $btc price has plummeted 14% from its all-time high of over $108,000 achieved last Tuesday, fueling speculations about why are bitcoin prices dropping and why is Bitcoin down, highlighting the unpredictability and volatility in the crypto market.
