• Bitcoin remains vulnerable as its near-term direction increasingly depends on the Federal Reserve's rate-cut outlook
  • The cryptocurrency has dropped approximately 30% from its October 2025 peak, trading near seven-month lows
  • Market volatility has been amplified by $1.27 billion in leveraged liquidations and potential government shutdown impacts

Bitcoin's bear market deepened Thursday as the digital asset hovered near seven-month lows, with analysts warning of further downside amid growing uncertainty about Federal Reserve policy and potential economic data disruptions.

The cryptocurrency fell to $91,478 after hitting $89,286 earlier in the session, according to LSEG data, extending a sharp decline that has erased roughly 30% of its value since October 2025 highs. The selloff comes as market participants reassess the likelihood of imminent Fed rate cuts amid persistent inflation readings hovering around 3%.

"Bitcoin remains highly sensitive to shifts in monetary policy expectations," said Carolane De Palmas, analyst at ActivTrades. "With Fed officials expressing concerns about still-too-high inflation and signaling that December cuts are now less probable, we're seeing continued pressure on speculative assets."

The central bank's hawkish stance has dramatically shifted market expectations. Where traders had previously priced in a 94% probability of rate cuts by year-end, those odds have now fallen to between 40-50%, according to people familiar with derivatives positioning.

Compounding the uncertainty, the looming threat of a US government shutdown could delay key economic reports that the Fed relies on for policy decisions. This information gap is weakening liquidity expectations and creating additional headwinds for risk assets, according to market participants.

Traders pointed to substantial leveraged liquidations totaling $1.27 billion as amplifying recent volatility. The forced selling has exposed structural weaknesses in the crypto ecosystem, with high interest rates making leveraged positions increasingly costly to maintain.

Despite the downturn, some institutional players have continued accumulating Bitcoin. MicroStrategy (MSTR) reportedly added to its substantial holdings during the recent weakness, though this has raised questions about market concentration risks during periods of stress.

Regulatory developments have added another layer of complexity. The Commodity Futures Trading Commission's plans to expand spot market oversight have contributed to volatility, linking crypto instability with broader financial sector risks.

Efforts to reach several major crypto trading firms for comment were unsuccessful Thursday. A spokesperson for one large market maker, speaking on condition of anonymity, described conditions as "challenging" with "reduced liquidity across the board."

The weakness in Bitcoin reflects a broader decline in risk appetite as investors rotate toward safer assets like US Treasuries. Other speculative assets, particularly unprofitable technology stocks, have also faced pressure amid the same macroeconomic headwinds.

Market structure appears increasingly fragile, according to analysts who note that similar vulnerability emerged during previous Fed tightening cycles, particularly the 2022 crash. The magnitude of current losses and scale of forced liquidations mirrors patterns seen during prior bear markets.

Looking ahead, the short-term outlook for Bitcoin remains pressured as long as Fed easing remains in doubt and inflation stays above target. If economic data becomes incomplete due to fiscal disruptions, volatility could intensify further, potentially testing key technical support levels below $85,000.

Correction: An earlier version of this article misstated the timing of Bitcoin's peak. The cryptocurrency reached its high in October 2025, not November.