Bitcoin prices spiralled lower on Monday, temporarily dipping below $85,000 as investors continue a selloff that began in October.
The cryptocurrency dropped more than 8% in the last 24 hours alone, falling to $84,096 as of 11:15 a.m. on Monday, according to data aggregator CoinGecko. Bitcoin has lost roughly a third of its value since Oct. 6, when it hit a record high of nearly $125,000. The slump has wiped out more than $750 billion in the digital currency’s total market value, CoinGecko shows.
Bitcoin’s plunge pulled other crypto-related stocks down with it, including mobile trading platform Robinhood, which tumbled 3.5%, and Coinbase, which lost 4.2%. Other leading digital currencies, including ethereum and XRP, also sank.
Why are crypto prices sliding?
Experts who spoke to CBS News said global economic developments are weighing on the crypto sector. Bitcoin prices sank after a Bank of Japan official hinted at a possible interest rate hike at its upcoming meeting on Dec. 18-19. Higher interest rates tend to stoke market demand for safer assets, while putting pressure on riskier investments, including crypto.
“$BTC dumped [because] BOJ put Dec rate hike in play,” Arthur Hayes, co-founder of cryptocurrency exchange BitMEX, wrote on X early Monday.
The selloff is also part of a broader decrease in risk appetite that is reverberating across other tech stocks, according to Nigel Green, CEO of global financial advisory group deVere Group. He noted that bitcoin’s performance has mirrored that of the Nasdaq Composite, where a 4% pullback in tech has translated into a near 30% drop in the value of bitcoin.
“Bitcoin has increasingly behaved as a leading indicator for broader risk assets, particularly U.S. technology stocks,” Green said in an email.
Investors are looking ahead to the Federal Reserve rate decision on Dec. 9-10, with investors expecting policymakers to again lower the Fed’s benchmark interest rate. The likelihood of a rate cut now stands at 87%, according to CME FedWatch.
While the market is pricing in a Fed rate cut, it could be accompanied by more hawkish forward guidance, which could hurt risk assets like bitcoin, according to Adam Crisafulli, head of Vital Knowledge.
“There’s a lot of moving pieces beyond just the actual policy decision,” Crisafulli said.
Despite the slump in bitcoin, some experts maintain a bullish outlook. Eric Schiffer, CEO of the Patriarch Organization, a private equity firm, said he expects a rebound next year as the Fed further eases interest rates.
“All of this is short-term,” he said.