Why is The Crypto Market Down Today? Rate Cut Odds Drop and Wreak Havoc

Cryptocurrencies have lost 12.5% of their value in the past 30 days, following the October 10 flash crash and the latest hawkish comments from the Federal Reserve.

Today, cryptos have lost 6% and trading volumes are surging just a couple of days after the United States government finally put an end to the longest shutdown in the history of the country.

On the surface, this might seem like a normal “sell the news” moment, but macroeconomic factors seem to be driving the latest downturn.

Odds of a Rate Cut in December Plummet to 47%

Since the last FOMC meeting, which took place on October 29, negative momentum has accelerated, as the head of the Federal Reserve, Jerome Powell, commented that it was uncertain if the institution would cut rates again in December.

Back then, analysts considered this rate cut a done deal. However, Powell’s remarks shocked analysts. Data from FedWatch indicated that 91% of analysts surveyed believed a rate cut in December would occur.

Probability of a Rate Cut in December – Source: CME Group’s FedWatch

Now, that same probability stands at 47%, highlighting a radical change in the market’s forecast that explains this correction.

Paired with President Donald Trump’s hostilities with China on the trade front, we have the perfect storm for the beginning of a bear market for cryptos.

Crypto liquidations today have spiked to $1.3 billion as Bitcoin (BTC) dropped by nearly 7% while Ethereum shed 10% of its value at some point during the session.

The American session appears to be cushioning the hit, but it seems highly likely that bearish momentum will spill over to the weekend when liquidity is low, and this same selling pressure can cause much more damage.

We have been tracking for days how Bitcoin’s price action behaves as it touches a critical level of support from which it has bounced three times in the past.

Today’s drop has pushed the price below BTC’s 50-week exponential moving average (EMA), and could be marking the beginning of a bearish cycle for the top crypto.

The next area of support to watch would be the $73,000 level, meaning a 21% downside risk. Yup, that’s right, huge loss ahead if the market keeps tanking.

On the bright side, if we get a rebound off this mark, that could be great news for bulls, as Bitcoin has made an all-time high every time it has jumped off this key EMA.

BTC Drops Below Key EMA Supports – $75K Next?

Now, heading to the daily chart, a bearish market structure has clearly formed since October 10, and now we got a confirmed downtrend going on.

The price broke below the critical 200-day exponential moving average (EMA), meaning that the long-term trend has shifted from bullish to bearish.

BTC/USD Daily Chart (Binance) – Source: TradingView

A potential near-term support for BTC would be $93,000, at which point the token could rise to retest the $100,000 mark from below. Another failed retest in this case would likely cause another wave of panic selling, further pushing BTC below the $90K area.

This resistance will coincide with the 200-day EMA at that point, further favoring a bearish outlook as this key line has now become a moving area of supply.