The price of the largest cryptocurrency falls below 86,000 dollars.
The short version
Table of Contents
- The Bitcoin price has fallen below $86,000, down more than $40,000 from its record high in October.
- Cryptocurrency is affected by fears of an AI bubble, which reduces risk appetite in the markets.
- Crypto investments have also experienced forced sales due to high leverage.
- “Extreme fear” dominates the crypto market, according to Coinmarketcap’s fear and greed index.
The summary is made by the AI tool ChatGPT and quality assured by E24’s journalists
The fear of an AI bubble is spreading in the markets and is choking the appetite for risk. It has caused stock market falls in both the US and Asia, and lowers the prices of riskier investments such as cryptocurrency.
Bitcoin falls by just over 7 percent in the last 24 hours to 85,734 dollars (885,554 kroner), according to Coinmarketcap. Thus, the price has fallen over 40,000 dollars in less than a month, from the record of 126,198 dollars in October.
Bitcoin’s little brother, Ethereum, is down nearly 8 percent in the last 24 hours to $2,793.
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Bitcoin crash: – Has lost momentum
If you started buying bitcoin at the start of the year, you have now lost over 8 percent. But over a longer period of time there is still an extreme rise. In the last two years alone, the price has risen 129 percent.
Extreme fear
Coinmarketcap’s fear and greed index now shows “extreme fear” in the crypto market. The index gives a picture of the mood among crypto investors and ranks from “extreme fear” with a bottom point of zero, to “extreme greed” of 100. On Friday morning, it stands at 11.
The crypto market fell sharply earlier in the week, as everyone was nervous ahead of results from AI giant Nvidia. The relief when the numbers turned out to be stronger than expected gave another boost, but the joy was short-lived.
It was not improved by the fact that US job figures showed surprisingly good growth. Although it is positive for the economy, it also gives less reason to cut interest rates.
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When gold turns to gray stone
The next US interest rate meeting will be held on 10 December, and it is very uncertain what the outcome will be. Lower interest is in itself positive for the willingness to invest, because it provides cheaper access to money, and thus also the crypto market.
According to market operator FlowDesk, the market is also struggling with a large flow of cryptocurrency sent to centralized exchanges from long-inactive bitcoin wallets.
Many investors are also less risk-averse towards the end of the year, before the accounts have to be settled.
Forced sale
The rise in the crypto market gained momentum when Trump won the election last year and introduced more crypto-friendly regulation in the US. At the same time, interest rate cuts and more interest from large, global investors have lifted the market to new heights.
The fall now comes in tandem with fears that the huge increase in the value of the tech giants in the US could hide a bubble, especially in artificial intelligence (AI).
High leverage of crypto investments has led to massive forced sales of positions, which have reinforced the falls this autumn. The biggest drop came after Trump threatened new massive tariffs on China in October. It led to the forced sale of 20 billion dollars worth of crypto assets.
