Asia Market Opens: Bitcoin Drops 2% as Selling Pressure Continues from October

In early trading today, Bitcoin has decreased by 2%, falling below the $107,000 mark. This decline is influenced by profit-taking by large holders (whales) and ongoing outflows from exchange-traded funds (ETFs). The current situation reflects the lingering effects of a challenging October, but traders suggest a consolidation phase may be underway as they prepare for potential upward movement in the near future.

Key Takeaways

Bitcoin fell 2% to $106,961 amid profit booking and ETF outflows.
Institutional demand has slowed, now trailing behind the rate of new Bitcoin issuance.
Major stock indexes rose on positive tech news, while some Asian markets experienced declines.
The Federal Reserve’s recent communications suggest a cautious approach to interest rate cuts.
Crypto markets are recovering from October's tumult, but volatility persists as traders navigate between headlines and macroeconomic indicators.

Bitcoin

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Bitcoin started the day trading at $106,961, marking a decline of 0.7%. Other cryptocurrencies also saw dips, with Ether down by 2.7% at $3,636 and XRP falling 3.4% to $2.35. Overall, the total cryptocurrency market cap decreased by 1.6% to $3.64 trillion.

Institutional Demand Weakens as Supply Increases

Data from on-chain analysis indicates a cautious atmosphere in the market. For the first time in seven months, institutional demand for Bitcoin has fallen behind the rate of new coin production, according to Charles Edwards, the founder of Capriole Investments. This shift suggests that larger buyers are stepping back, reflecting a broader risk-averse sentiment across the cryptocurrency space.

In contrast, equity markets responded positively. Major stock indexes rose on Monday following news that Amazon would be providing cloud services to OpenAI. Meanwhile, the dollar strengthened against the euro, reaching a three-month high, as expectations for substantial U.S. interest rate cuts diminished.

Federal Reserve's Cautious Outlook

The Federal Reserve remains a key factor influencing market sentiment. Last week, the Fed's decision to adjust policy aligned with expectations; however, Chair Jerome Powell emphasized that an interest rate cut at the upcoming December meeting is "not a foregone conclusion," which has tempered traders' enthusiasm for aggressive dovish bets.

Fed officials expressed mixed opinions on economic growth and inflation on Monday, while the ongoing U.S. government shutdown delayed critical economic data. Consequently, markets now estimate a 70% chance of a 25-basis-point rate cut in December, down from approximately 94% a week earlier.

Searching for Stability After October's Liquidation

The crypto market is still feeling the aftermath of October's liquidation wave, which significantly reduced leverage and risk capital. Rebuilding this base is a gradual process, leading to selective buying during spot dips, with rapid sell-offs occurring once supply increases on exchanges.

According to Rachel Lin, CEO of SynFutures, "October’s correction has effectively flushed out leverage and reset sentiment." She also noted that on-chain data shows long-term holders are not capitulating; instead, they are accumulating bitcoin. Consistent outflows from exchanges are a historically positive indicator for the market.

As markets assimilate the insights from the Fed’s recent comments, November may see sideways movement. A decrease in inflation rates or a clearer message about easing monetary policy could trigger a recovery, while Ethereum may follow a similar trajectory, buoyed by network upgrades and increased institutional engagement in decentralized finance (DeFi).

At present, market stability largely relies on trading flows. If ETF redemptions and exchange inflows reduce, Bitcoin's spot price may stabilize above recent lows. Until conditions improve, the market will continue to react to headlines, with macroeconomic factors and trading positions driving market movements.