Bitcoin experienced a sharp downturn, falling to a low of $88,500, as Federal Reserve minutes signaled deep divisions and fading expectations for a December interest rate cut.
The cryptocurrency touched $88,540 on Wednesday, a level not seen since April of this year, and marked a 5% negative return since January 1, 2025. This wiped out over 30% from its all-time high of $126,000 reached on October 6.
Minutes from the Federal Reserve’s October meeting, released Wednesday, revealed “risks in both directions” for employment and inflation, alongside “deep divisions” among officials regarding the future pace of monetary easing. The document indicated the decision for December remains “completely open,” with discussions ranging from holding rates steady to cuts of 25 or even 50 basis points.
Market expectations reacted immediately to the Fed’s cautious stance. The probability of a 25 basis point rate cut in December plummeted to 33%, down from 50% just the day before and nearly 100% three weeks ago, according to the CME FedWatch tool. Similarly, on Polymarket, the likelihood of a cut dropped from 52% to 30%, while the probability of rates remaining unchanged surged to 70%.
The market’s uncertainty was compounded by a lack of current labor market data. A partial U.S. government shutdown prevented the release of October’s employment report, and the November report will not be available until after the Fed’s December meeting, leaving policymakers without updated economic indicators.
Analysts at K33 Research described the current correction as the worst since 2017, warning of a “dangerous setup” in the derivatives market. Open interest increased by over 36,000 Bitcoin, the largest surge since April 2023, accompanied by aggressive leverage.
Vetle Lunde, a senior analyst at K33, identified the range of $84,000-$86,000 as a potential short-term floor for Bitcoin. However, he did not rule out further declines toward $74,500 if selling pressure accelerates.
The market experienced significant volatility, with $633 million in positions liquidated in the last 24 hours. Bitcoin later recovered slightly, trading above $90,000 as of this report’s close.