Bitcoin sheds Yearly Gains, Dips Below $90,000 Amidst Economic Uncertainty and Technical Issues
Bitcoin experienced a significant downturn, erasing its gains for the year and briefly falling below the $90,000 mark, as investors grapple with concerns about potential Federal reserve policy and recent market disruptions. The cryptocurrency’s decline is compounded by weakening inflows into Bitcoin spot ETFs, liquidation events in derivatives markets, and a major outage impacting key internet infrastructure.
Market analysts suggest a potential for short-term recovery hinges on upcoming economic data. “If inflation and employment data show a further slowdown, we may see a short-term bounce; if not, markets will likely remain range-bound and flow-controlled through the weekend,” Nexo Dispatch analyst Ilya Kalchev told Investing.com.
Rate Cut Doubts Drive Risk Aversion
growing skepticism surrounding a December interest rate cut by the Federal Reserve is fueling a wave of risk aversion in the market. Fed officials, including Chairman Jerome Powell, have indicated a cautious approach to further easing, leaving investors uncertain about the central bank’s next steps. This uncertainty is exacerbated by a backlog of economic data following the recent government shutdown, though the september non-farm payrolls report is scheduled for release on Thursday.
Bitcoin ETF Inflows Slow, Liquidations Intensify
Adding to the downward pressure, inflows into Bitcoin spot etfs have weakened, with institutional investors pulling back amid increased market volatility. This trend has been mirrored in the broader digital asset sector, with shares of crypto-related companies and mining firms also experiencing sharp declines.
The downturn follows ample liquidations in cryptocurrency derivatives markets. Analysts report that over $19 billion was wiped out of leveraged positions in a single 24-hour period earlier in the month, triggering forced selling. Bitcoin last traded below $90,000 in late April, highlighting the rapid erosion of investor confidence in light of geopolitical risks and the uncertain timing of US interest rate cuts.
Cloudflare Outage Disrupts Crypto Platforms
On tuesday,a major network outage at Cloudflare disrupted services for numerous cryptocurrency platforms,including Coinbase and Kraken,and also other major websites like ChatGPT,Spotify,and X.Cloudflare,a key provider of security,routing,and edge computing services,acknowledged an “internal service degradation” at approximately 11:48 a.m. UTC and stated it was working to resolve the issue. The outage coincided with scheduled maintenance in some of the company’s data centers, though a direct connection was not confirmed.
Altcoins Follow Bitcoin’s Descent
The broader cryptocurrency market experienced a collective decline on Friday. Ethereum, the second-largest cryptocurrency, fell 2.5% to $3,074.07, while ripple, the third-largest, dropped 4.4% to $2.18.
