After reaching record highs of over $120,000 in July, Bitcoin has now fallen below $85,000 as institutional investors have started to lose interest in the most prominent cryptocurrency. Currently, Bitcoin accounts for over 65% of the total cryptocurrency market cap of $3.2 trillion, with many institutional investors- hedge funds, private equity funds and even central banks- have been hoarding Bitcoin from miners with the hope of gaining consistently high returns.
Of late, that hope has been fading, with record redemptions in September and October marking the start of the cryptocurrency’s decline.
The reasons for Bitcoin’s current decline
Investors have been eagerly waiting for clarity from the US Federal Reserve for its decision to lower interest rates, a key demand that the Reserve has kept delaying for quite some time. Based on the current macroeconomic scenario, analysts say there is a 40% chance of a rate cut, which is due to be announced following the Fed’s Dec 10-11 meeting. Most Federal Reserve policymakers have been reluctant for a rate cut, even as crypto markets have been on edge for its announcement, which has affected sentiments.
According to crypto analytics firm CryptoQuant, long-term holders of cryptocurrencies, mostly institutional investors, have sold about 815,000 Bitcoin (BTC) in the last 30 days, the most since early 2024. Nearly $74 billion of cryptocurrencies have been sold as institutional investors are dumping the cryptocurrency in record numbers.
This comes at a time when tech-based stocks are sliding, and investors have started to prefer safe investments like gold or silver.
“The sentiment in crypto retail is pretty negative,” Matthew Hougan from Bitwise Asset Management, a leading crypto fund manager, said.
“They(institutions) don’t want to live through another 50% pullback. People are front-running that by stepping out of the market.”
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