Before Thanksgiving this year, Bitcoin (BTC▼Bitcoin and other major cryptocurrencies are showing signs of weakness. According to the latest market data, Bitcoin has fallen more than 30% since its high on October 6th, reaching a low of $84,535.40 as of Friday (November 22nd). This is the most significant drop since February of this year, when Bitcoin experienced similar price fluctuations. Many analysts believe the sell-off will continue around Thanksgiving, and with the Federal Reserve unlikely to cut interest rates, investors are rushing to cut their losses.
![图片[1]-Bitcoin has had its worst week, and the decline may continue during the Thanksgiving holiday?-OzABC](https://www.ozabc.com/wp-content/uploads/Thanksgiving-week-Bitcoin-falling-732x550.jpg)
Increased volatility around Thanksgiving
Looking back at the Thanksgiving period over the past four years, Bitcoin’s price has experienced varying degrees of volatility, further highlighting the impact of seasonality and market sentiment on the cryptocurrency market. The correlation between Bitcoin’s price movements and other asset classes, changes in fund flows, and especially investor expectations regarding interest rates and monetary policy, can all significantly influence the market around Thanksgiving.
Bitcoin closed down 2.1% on Friday, bringing its weekly decline to over 10%. Other major cryptocurrencies also fell sharply, with Ethereum down 3.7%, Solana down 4.8%, and XRP down 3.3% (as of 4 p.m. Friday). The cryptocurrency market downturn is mainly due to investor expectations that the US Federal Reserve (Fed) will not cut interest rates in the near future, coupled with shifts in capital flows, which have exacerbated the selling pressure on risk assets.
Despite the rebound in U.S. stocks on Friday, particularly the tech-heavy Nasdaq recovering from Thursday’s plunge, cryptocurrency investors remained cautious and did not actively build positions following the stock market rally. This indicates that investors remain highly sensitive to risky assets and are unwilling to increase their exposure in an uncertain market environment.
Investors continue to sell, driving down the price of the coin.
Bitcoin fell 2.1% on Friday to $84,535.40 (as of 4 p.m. Friday). The week-to-date drop is 10.3%. This is its worst performance since the last week of February, when Bitcoin fell 11.4%. A simple explanation for Friday’s disjointed price action is that Bitcoin has fallen more than 30% since its October 6 high, resulting in losses for many holders. Since cryptocurrencies are typically held in margin accounts, some may have had to sell to cover losses, further depressing the price.
Bitcoin may face further sell-offs.
Analysts at financial research firm Sevens Report wrote on Friday that from a demand perspective, the market appears to be experiencing a growing sense of unease, which could escalate into a full-blown panic if selling pressure continues to intensify, as falling prices trigger further selling, creating a vicious cycle. The recent cryptocurrency price crash was caused by several factors. First, investors are uncertain whether the Federal Reserve will cut interest rates next month. If the Fed keeps rates unchanged, Bitcoin and similar cryptocurrencies will become less attractive relative to interest-bearing investments such as bonds and savings accounts. Second, due to the overvaluation of artificial intelligence, the market believes now is a good time to sell risky assets.
Many investors bought Bitcoin when it was priced around $90,000. Now that the price is below that level, they may be reluctant to continue buying, especially if they have incurred losses, particularly if they borrowed money to buy Bitcoin and are now facing margin calls. Margin calls mean brokers will require investors to provide additional funds to repay their loans. This, in turn, could lead to forced selling, putting further downward pressure on the asset price.
Adam Morgan McCarthy, head of research at cryptocurrency data provider Kaiko, told Barron’s that liquidity in markets is likely to dry up this week and with the holidays approaching. Further liquidity depletion could exacerbate price volatility if investors continue to close positions before the holidays. Don’t expect the plunge to stop there. Given that trading volumes are likely to be thin starting Thursday after the Thanksgiving holiday, prices could fluctuate significantly next week. This means Bitcoin could continue to fall with only minor pressure.
Despite the current subdued market sentiment, Bitcoin and other cryptocurrencies may still see a rebound in the future. While current selling pressure is significant, Bitcoin remains a relatively long-term investment. Due to its limited supply (i.e., the maximum total supply of Bitcoin is capped at 21 million), many analysts believe that demand will gradually recover over time, especially given the backdrop of global economic instability and a downturn in traditional asset markets.
However, in the short term, Bitcoin’s price still faces considerable challenges. Given the current market situation, pre-holiday liquidity constraints could exacerbate market volatility, and the future direction of the cryptocurrency market will depend on several factors, including the direction of the US Federal Reserve’s monetary policy, the global economic situation, and investor attitudes towards risk assets.
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