Bitcoin experienced a significant drop on Wednesday, falling below $100,000 after briefly reaching $105,000 earlier in the day. The decline was sharp, with a 4% decrease occurring within just a few hours following the opening of US markets.
While Bitcoin struggled, Ethereum faced an even steeper decline, plummeting nearly 5% to dip under $3,200. Other cryptocurrencies like Solana and XRP also saw significant losses, adding to the overall bearish sentiment in the market.
This recent trend of overnight gains being erased once US trading hours commence has been a recurring theme for several weeks. The Coinbase Premium, which measures the price disparity between Coinbase and Binance, has remained negative since late October. This indicates a lack of buying interest from American investors, who appear to be either selling off assets or remaining inactive.
This extended period of negative Coinbase Premium is the longest since March-April when Bitcoin fell from over $100,000 to approximately $75,000, a comparison that does not bode well for bullish market sentiments at present.
The situation is further complicated by the turmoil surrounding the Federal Reserve. What many anticipated would be a straightforward rate cut in December has turned into a complex scenario, with policymakers divided between concerns over inflation and the weakening job market.
Since the Federal Reserve”s October meeting, Bitcoin exchange-traded funds (ETFs) have witnessed over $1.8 billion in outflows, a clear indicator of the current lack of appetite for cryptocurrency investments among American institutions.
In conclusion, it is evident that U.S. traders are exerting downward pressure on the crypto market. With institutions pulling back and uncertainty from the Federal Reserve dampening investor sentiment, Bitcoin and the broader cryptocurrency market find themselves entrenched in a pronounced, sentiment-driven downturn.
