Bitcoin crashed to a six-month low this week, dipping to just above $96,000 by Friday morning.
The cryptocurrency has slid from over over $140,000 last month, and fallen nearly eight percent over the last five days alone, showing that investors are now racing to liquidate their holdings.
There are likely several factors at play. For one, economic uncertainty over possible changes to interest rates has already triggered a major tech selloff this month. (It’s worth noting, though, that crypto was long seen as a hedge against stocks — but is now falling in tandem with gold and the stock market.)
Investors could also be deprioritizing volatile assets like crypto in light of traders predicting that there’s only a 50 percent chance the Federal Reserve will cut interest rates. A cut is usually met with increased liquidity and a higher willingness among traders to invest in more risky assets.
As Fast Company points out, many tech stocks, including AI-adjacent ones, are also becoming far riskier bets as the gulf between company valuations and actual revenues continues to grow — an enormous bubble that tech leaders are now openly discussing in the media.
Even the end of the government shutdown hasn’t reignited market enthusiasm. The administration is dragging its feet on issuing the latest job reports and inflation data, undermining investor confidence further.
Then there’s president Donald Trump’s continued embrace of crypto. The president has made billions of dollars from digital currency investments and has frequently been accused of using his office to manipulate the market for his own gain.
Most recently, Trump’s sons, Eric Trump and Donald Trump Jr., reported that their crypto mining operation, American Bitcoin, had doubled its profits in its last quarter, raking in over $64 million in revenue between the start of the year and the end of September.
Eric Trump was also mocked on social media this week for being “out of touch” after boasting to Fox Business that he could “send $500 million worth of Bitcoin on a Sunday night at 11 pm while having a glass of wine with your wife, for virtually zero fees.”
Trump also made headlines last month after repeatedly failing to explain why he had pardoned Binance founder Changpeng Zhao, whose crypto exchange facilitated a multibillion-dollar deal involving the Trump family’s own World Liberty Financial.
It’s a bad look for an administration that’s become known for frivolous meme coin launches and backdoor crypto deals with the Middle East. While Bitcoin’s value has rallied overall since Trump took office, the most recent crash could suggest a far more nuanced and possibly troubled relationship.
And the bottom line is that almost all its gains since the election have now been wiped out. Bitcoin was hovering around the $94,000 mark at the beginning of the year, around the time Trump was sworn in.
The Federal Reserve will be announcing its decision on interest rates on December 10, which could send further shockwaves through the crypto industry and a tech sector that continues to grapple with soaring debt and enormous losses.
More on Bitcoin: Trump Can’t Explain Why He Pardoned Crypto CEO Who Did Huge Financial Favors for Him
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