Bitcoin prices fell to their lowest since roughly November 19 today.
Bitcoin prices declined on Monday, January 13, dropping to less than $90,000 and reaching their lowest level in several weeks as multiple factors contributed to bearish activity.
The world’s most prominent cryptocurrency, which celebrated its sixteenth birthday earlier this month, fell to nearly $89,000, according to Coinbase data from TradingView.
As a result, the digital asset was down roughly 18% from its all-time high of more than $108,000, additional Coinbase figures from TradingView show. Past that, it was trading at its lowest level since approximately November 19.
‘A Mix Of Factors’
When asked what caused these latest declines, analysts highlighted several potential causes.
“Bitcoin’s recent plunge below $90,000 likely stems from a mix of factors, including macroeconomic pressures like rising interest rates and recession fears, regulatory concerns, and cascading liquidations from leveraged positions,” Joe DiPasquale, CEO of cryptocurrency hedge fund manager BitBull Capital, wrote via emailed comments.
“Market sentiment may also have been shaken by profit-taking, reduced institutional adoption news, or technical breaches of key support levels, all of which compounded the sell-off,” he added.
Fed Rate Cut Expectations
Several market observers highlighted how strong economic data has shifted the expectations many have for Federal Reserve rate cuts and the impact this has had on risk assets, including stocks and cryptocurrencies.
“Bitcoin’s price has been extremely correlated to the equities market in recent weeks, which has been under material pressure. This is due to economic data coming out that has caused traders to walk back all cut expectations for the Federal Reserve over 2025,” Steven Lubka, head of Swan Private at Swan Bitcoin, stated via emailed comments.
“Traders no longer expect any cuts. My opinion is that this is almost certainly incorrect and will cut, but changing sentiment has dragged down the S&P into what was a little over a 5% correction at the low this morning,” he stated.
“This had a strong impact on the Bitcoin price,” Lubka emphasized.
Greg Magadini, director of derivatives for digital asset data provider Amberdata, also commented on these matters.
“The stock market (and risk-assets) continue to be sensitive to the treasury yield curve and the expectation for future Fed cuts, since the hawkish rhetoric in December’s FOMC” statement, he said via email.
The market observer emphasized that following last month’s FOMC policy meeting, the minutes indicated the Fed policymakers are “comfortable holding rates higher for longer.”
“With a strong labor market, potential price tag inflation from tariffs, and the shrinking of the low-wage labor force from immigration policy reforms, the US rate curve could definitely remain a drag on stocks and risk assets if inflation picks up again,” Magadini stated.
“Keep in mind that equity risk-premium (the additional return over risk-free bonds) remains historically low, which explains the bearish equity reaction as yields move higher, despite the strong economy. Although inflation could be bullish for Crypto and Gold in the longer term, the immediate impact is a reflex for prices to drop lower as rate expectations shift towards ‘higher for longer.’”
Brett Sifling, wealth manager for Gerber Kawasaki Wealth & Investment Management, also spoke to the expectations surrounding the FOMC, but also highlighted some other factors when explaining the latest price movements of the world’s most valuable digital currency.
“As for Bitcoin, it seems like this sell off is from continued risk-off sentiment and news that the U.S. government gained court approval to sell their massive Bitcoin stockpile acquired from the Silk Road days,” he stated via email.
“This doesn’t mean that the U.S. will sell all of their holdings, but the expectation is that they’ll auction off the crypto as it does with other assets like real estate or cars,” Sifling added.
In terms of the key developments bitcoin investors should monitor over the coming weeks and months, he offered his thoughts.
“Going forward, Bitcoin investors will be watching Donald Trump’s inauguration as a potential bullish catalyst and the ongoing FTX claim distributions as a bearish risk.”
Disclosure: I own some bitcoin, bitcoin cash, litecoin, ether, EOS and SOL.
