Overnight crypto gains evaporated once again in US morning hours as bitcoin fell below $102,000 on Wednesday.
Today it briefly surpassed $105,000, the largest cryptocurrency fell 3% in just a couple of hours when traditional US markets opened. It wasn’t just bitcoin; ether fell almost 5% below $3,400 during the same period, while Solana , and other large altcoins suffered similar falls.
US cryptocurrency-related stocks are also taking a beating early in the session. USDC stablecoin issuer Circle (CRCL) fell 9.5% following 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, down 5% to 10%.
Weak American appetite for bitcoin
Lackluster price action during US trading hours has been a staple over the past few weeks in the crypto markets. A sign of weak US investor appetite is the so-called Coinbase Premium, a popular indicator of US investor demand, which has been negative since late October.
Coinbase Premium measures the price difference for BTC spot on Coinbase, a crypto exchange widely used by US clients and many institutional market participants, compared to prices on Binance, the leading exchange by trading volume that is popular with offshore retail users.
That’s the metric’s longest losing streak since March-April, when BTC fell to $75,000 from over $100,000 in a market-wide correction.
Federal Reserve divided on rate cuts
The change in US 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 an easy path to another rate cut in December has now become an internal battle among policymakers.
According to a recent Wall Street Journal report, the central bank faces an internal division, with policymakers divided over whether the biggest risk now is persistent inflation or a weakened labor market. That divide has left the path to a rate cut in December much less clear than it seemed just a few weeks ago.
The recent government shutdown, which temporarily froze the release of key data on employment and inflation, has only widened that divide by forcing policymakers to rely on private data and anecdotes, according to the report.
A cut in December is now “a failure,” according to the report, and even deciding on lowering rates could come with higher guidance standards for further reductions.
Since the Federal Reserve’s October meeting, US-listed spot bitcoin ETFs have recorded more than $1.8 billion in net outflows, indicating that uncertainty surrounding the Fed’s action and a lack of clear positive catalysts are keeping BTC on edge.
