Why Crypto Market Is Down Today, What's Driving the Decline?

Why Crypto Market Is Down Today:Impact of U.S Election and Fed Meeting

Crypto Market Decline as Election Week Fuels Uncertainty

Bitcoin (BTC) and the broader crypto market are experiencing a dip in early November, spurred by growing concerns over expected volatility tied to the 2024 U.S. election and potential adjustments in Federal Reserve policy. As BTC closed the first week of November with a bearish tone, traders are increasingly cautious of market fluctuations as the U.S. election results draw near.

Federal Reserve Rate Cut Adds Pressure to Crypto Market

The Federal Reserve has scheduled a 25 basis-point rate cut for November, following a 50-point cut in September. With inflation steady at 2.1% and wage growth slowing to just 0.8%, economic signals are mixed, leading to heightened market alertness. This week’s Federal Reserve meeting, aligned with the election timeline, could bring impactful shifts to the crypto market if monetary policy is adjusted to match the changing economic landscape.

Concerns Arise as Bitcoin ETFs See Major Outflows

Bitcoin exchange-traded funds (ETFs) have gained traction among investors, but recent events have raised serious concerns regarding their stability. On November 1, 2024, U.S. Bitcoin spot ETFs experienced a significant one-day outflow of $54.94 million, reflecting growing unease in the market. This outflow coincides with a decline in Bitcoin’s price, prompting analysts to caution about potential challenges ahead for the market.

Major Liquidations Hit Crypto Market Amid Election Tensions

In the lead-up to the election, the crypto market faced significant liquidations amounting to nearly $350 million on November 3. As Bitcoin briefly dropped below $69,000, traders responded with caution, leading to high liquidation levels. Data from CoinGlass shows a total of $349.78 million liquidated, split between $259.7 million in long positions and $90.08 million in short positions. This surge marks the largest single-day liquidation event since October 25, when Bitcoin struggled to sustain its rally above $70,000.

U.S. Election Outcomes Remain Uncertain, Influencing Crypto Sentiment

Political uncertainty is heavily influencing market sentiment, with narrowing betting odds between presidential candidates Donald Trump and Kamala Harris. According to Polymarket, Trump’s odds, which had peaked at 67% on October 30, recently corrected to 56%, reflecting the unpredictability of the election outcome. Historically, Trump has been perceived as more favorable for the crypto sector due to his advocacy for regulatory reforms that could benefit digital assets.