Daily Market Update: Crypto and Stocks Tumble on Federal Reserve Policy Uncertainty

TLDR

• Bitcoin fell below $95,000 to its lowest level in six months during a four-day decline that affected both crypto and traditional markets
• US-listed spot Bitcoin ETFs recorded their second-largest daily outflow ever at $870 million, with total crypto liquidations exceeding $1.38 billion
• The S&P 500 dropped 1.6%, the Nasdaq fell 2.3%, and the Dow Jones lost 797 points in Thursday’s trading session
• Federal Reserve officials appear divided on whether to cut interest rates in December, with traders now placing the odds below 50%
• Major altcoins experienced mixed performance, with Ethereum down 8% while Zcash rallied 24% ahead of its halving event

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Bitcoin dropped below the $95,000 mark this week, reaching its lowest price in six months. The decline came as part of a four-day slide that affected the entire cryptocurrency market.

Bitcoin (BTC) Price

The selloff coincided with a sharp downturn in traditional stock markets. The S&P 500 fell 1.6%, while the Nasdaq Composite dropped 2.3%.

The Dow Jones Industrial Average lost 797 points after reaching a record high just one day earlier. The Russell 2000 index, which tracks smaller companies, fell 2.9%.

E-Mini S&P 500 Dec 25 (ES=F)

US-listed spot Bitcoin ETFs experienced massive outflows of $870 million in a single day. This marked the second-largest daily withdrawal since these funds launched.

The crypto market saw over $1.38 billion in liquidations across derivatives markets. Ethereum ETFs also experienced selling pressure during the decline.

Tech stocks took a beating during Thursday’s session. Dell Technologies shares fell 4.8%, Nvidia dropped 3.8%, and Palantir declined 6.5%.

The market downturn stems from changing expectations about Federal Reserve policy. Traders now estimate less than a 50% chance of a rate cut at the Fed’s December meeting.

This represents a major shift from just two weeks ago. In late October, more than 90% of traders expected a rate cut.

Fed Chair Jerome Powell surprised markets on October 29 with cautious comments. He stated that a rate reduction in December was “not a foregone conclusion.”

Fed officials have since expressed divided views on the next policy move. Governors Lisa Cook and Philip Jefferson suggested they may support pausing rate cuts.

Regional Fed presidents Alberto Musalem and Austan Goolsbee also took cautious positions. Their comments indicate they might vote against further rate reductions.

Analysts at Evercore ISI expressed concern about the division within the Federal Reserve. They noted the split creates additional uncertainty about future rate decisions.

Market Movements Across Assets

Bitcoin is currently trading near the $94,000 to $95,000 support zone. Analysts say a bounce toward $100,000 to $103,000 is possible if this level holds.

Large cryptocurrency holders, known as whales, made moves across Bitcoin, Ethereum, Chainlink, and Zcash. These transactions suggest both defensive positioning and potential rebound bets.

Ethereum suffered an 8% daily decline but found some stability as ETF selling slowed. The second-largest cryptocurrency showed signs of stabilizing after the initial drop.

Not all altcoins followed the same pattern during the selloff. Zcash posted a 24% rally ahead of its upcoming halving event.

Chainlink launched a new “Rewards Season” airdrop program for stakers. This provided value to holders during the broader market decline.

Despite the current downturn, major stock indexes remain up double digits for the year. The Russell 2000 has gained nearly 7% in 2025.

Tax-driven profit-taking ahead of year-end contributed to the volatility. Concerns about a potential US government shutdown also added to market pressure.

Asian and European markets showed more stable demand for cryptocurrencies than US markets. This points to different regional approaches to risk and regulation.

Recent Trading Activity

The correlation between crypto and traditional markets became clear during this week’s decline. Both asset classes moved lower together as investors reduced risk exposure.

Trade negotiations between the US and China remain a factor in market sentiment. Shifting expectations for central bank policy on both sides of the Pacific affect digital asset prices.

Bitcoin’s current price action represents its lowest level since May 2025. The cryptocurrency extended losses beyond the psychological $95,000 threshold.

Collins’ Wednesday comments about maintaining a high bar for rate cuts increased market uncertainty. Analysts noted this reflects Powell’s challenge in managing divisions within the Federal Reserve.

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