Bitcoin dropped about 7% in intraday trading today, falling below $84,000 in early trading, marking a continuation of the downward trend that has persisted throughout 2025. This decline follows a pattern of falling prices across major cryptocurrencies, as the market faces multiple underlying pressures. The recent drop is not tied to a single event but rather a combination of factors affecting investor confidence and market liquidity, all unfolding as the Federal Reserve’s upcoming interest rate decision looms.
One of the immediate reasons for Bitcoin’s price fall is the uncertainty regarding the Federal Reserve’s next move. The Fed is scheduled to announce its decision on interest rates between December 9 and 10. Markets are currently pricing in about an 83% chance of a 25-basis-point cut. Typically, lower interest rates help markets like cryptocurrencies by increasing liquidity and encouraging risk-taking among investors. However, the uncertainty about whether such a rate cut will materialize, or if it will be sufficient, has led to caution. If the Fed opts not to lower rates or the cut is seen as insufficient, liquidity might not improve, putting additional pressure on risky assets such as Bitcoin.
Another key influence is the broader risk-off sentiment in financial markets. Shares of high-risk, tech-focused stocks, especially those connected to artificial intelligence like Nvidia and Microsoft, have been volatile and declining. Many investors who have stakes in these tech stocks also hold cryptocurrencies. When prices drop in one high-risk sector, these investors often liquidate other high-risk assets to minimize losses, creating a ripple effect. This behavior exacerbates declines in Bitcoin and other digital assets. Moreover, forced liquidations in crypto markets, where leveraged traders fail to meet margin requirements, have pushed prices lower again.
Liquidity in crypto markets remains a significant concern. After a massive liquidation event earlier in the year, investors have stayed cautious, leading to reduced inflows in crypto funds. November saw spot Bitcoin funds suffer outflows amounting to roughly $3.5 billion. This drying liquidity means that even moderate selling can lead to substantial price movements. The thinning liquidity combined with the looming Federal Reserve decision and negative market sentiment has created a challenging environment for Bitcoin.
Additional pressures include warnings from Chinese regulators about illegal activities in digital tokens, which have negatively impacted sentiment not only in Asia but globally. Regional market reactions to these warnings included declines in Hong Kong digital asset stocks, adding to the global unease surrounding cryptocurrencies. Despite Bitcoin’s peak above $126,000 earlier this year, the digital currency has since lost roughly 7% of its value from the beginning of 2025 to now, reflecting an overall cooling of investor enthusiasm throughout the year.
Looking forward, while the current environment is challenging for Bitcoin, some analysts note the potential for a market reversal as the Federal Reserve’s December meeting approaches. Historically, announcements by the Fed can lead to rapid sentiment shifts, and an unexpected decision could renew risk appetite. However, until then, the combination of thin liquidity, market uncertainty, risk aversion, and ongoing forced liquidations may keep Bitcoin prices under pressure.
