The global cryptocurrency market has suffered one of its biggest drops this year, losing almost $400 billion in just one week. Bitcoin led the fall, dragging other digital currencies and even parts of the stock market down with it.
Bitcoin fell to about $81,919 on Friday, more than a 10% drop in 24 hours and its weakest point since April. This is a sharp reversal from early October, when the coin hit a record high of over $126,000.
It’s not just bitcoin. The value of all cryptocurrencies combined has fallen to around $3 trillion, down almost $400bn in a week, according to CoinGecko data. Unlimited Funds CEO Bob Elliott told U.S. outlet Axios that bitcoin’s decline is tracking the latest weakness in the stock market but with “much more extreme” movements.
Why this is happening
A big factor behind the sell-off is uncertainty around U.S. interest rates.
CNBC reported that investors pulled back from riskier assets after stronger-than-expected U.S. jobs data. The U.S. economy added 119,000 jobs in September, more than double what analysts expected. This raised doubts that the Federal Reserve will cut interest rates in December.
The chance of a rate cut has now dropped to about 40%, according to the CME FedWatch tool quoted by CNBC.
Because many crypto traders also invest heavily in tech and AI-related stocks, the fall in bitcoin also weighed on U.S. stock markets.
Global concerns over a tech bubble
Beyond crypto, global markets are jittery. The UK Guardian reported that more than $1 trillion has been wiped off the crypto market in the past six weeks alone amid growing fears of a broader tech bubble.
Bitcoin has fallen 27% over that period to around $91,212, its lowest since April.
Top tech leaders are also warning about overheated valuations. Google parent company CEO Sundar Pichai told the BBC that there is “irrationality” in the current AI boom and that “no company is going to be immune” if the bubble bursts.
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