Why is Crypto Down Today? Bitcoin Slides as Fed Cut Odds Fade

Digital assets have erased over $1.19 trillion of their market capitalization since October 7. Amid major macroeconomic uncertainty, diverging Fed expectations, and a slower U.S. stock market, cryptocurrencies are feeling the brunt of the impact as investors' expectations shift.

The market’s slide began on October 10, as President Trump threatened China with additional tariffs due to a rift in rare earth products. However, while U.S. and Chinese officials appear to have agreed on a rare earths trade truce, the market’s downside momentum persisted.

Since then, the cryptocurrency market has lost over 26% of its value. This selloff has erased nearly all profits gained during this year's bull run, leading Bitcoin and many other currencies to reach the level they had in November 2024. 

Bitcoin briefly dipped to the $90k level on November 18, marking its lowest price-per-coin since April of this year. Other major cryptocurrencies have followed suit, with Ethereum, Solana, and Avalanche all posting north of 6% losses over the past week.

U.S. Demand For Crypto Remains Low

The Coinbase Premium Index, the metric that compares the price of BTC on Coinbase - the most used exchange among Americans - with other CEXs, is showing a persistent negative premium, indicating that Bitcoin is trading at a discount on Coinbase compared to global platforms.

source coinglass

This suggests that the demand for Bitcoin, particularly in its largest market in the world, is weakening. U.S.-based investors appear more inclined to sell their assets, but risk-off sentiment continues strong in other parts of the world as well. 

CoinMarketCap's "Fear & Greed Index" is showing that market sentiment has swung firmly into the “Extreme Fear” zone, with the index closing in on its lowest point in a year. 

Rising risk-off sentiment can be seen in the divergence that Bitcoin and Gold have had since October ended. While BTC lost nearly 20% of its value in that time, the precious metal gained 2.81%.

Amid ongoing uncertainty, investors are increasingly favoring traditional safe-haven assets while removing their positions from speculative markets. 

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Crypto Trailing Tech Stocks

A recent hiccup in U.S. stocks, particularly in the technology and AI sector, may explain why risk-off sentiment has been on the rise in recent weeks. Similar to crypto, stocks are under a lot of pressure in November, also right after registering new all-time highs in October. 

The leading company in the AI tech sector, Nvidia (NVDA), has been seeing recurring intraday losses for a week. On November 11, Japanese firm SoftBank announced it was selling its entire stake in Nvidia, worth roughly $5.8 billion. Since then, the stock shed over 7.26% of its market value, leading NVDA to hit breakeven monthly levels, a rare occurrence for the stock in 2025. 

While tech companies are performing at an unprecedented pace this year, rising spending on infrastructure and data capacity has also begun to spook investors, who fear that ballooning costs could erode margins and weigh on long‑term profitability.

This drop in speculative demand is also affecting crypto, as digital assets often mirror the broader appetite for risk in equity markets.

Crypto and the "Magnificent 7" stocks are seeing a parallel decline since November kicked off. While digital assets definitely got hit harder by it, the downturn in the “Magnificent 7” — Apple, Microsoft, Amazon, Alphabet, Meta, Tesla, and Nvidia — has also been notable.

Interest Rate Cut is Becoming Unlikely for December

Before a wave of uncertainty hit markets, expectations for a third consecutive interest rate cut in December were high. However, in light of the 43-day-long government shutdown in the U.S., the Fed found itself confronted with limited economic data, without its usual indicators to assess the state of inflation and employment. 

FOMC members have been publicly addressing this concern in recent weeks, with many of them hinting that the lack of reliable data could force the Committee to maintain rates at the current 3.75-4.00% in December. 

The CME FedWatch tool is now pointing to a higher likelihood of "no cuts". To put it in context, only a month ago, the tool showed a 93% chance that the Fed would lower borrowing costs at the FOMC meeting on December 10.