• Bitcoin dropped 5.4%, triggering a broad sell-off in crypto-linked equities and ETFs.
  • Major miners like Bitfarms and Marathon Digital saw losses exceeding 8%, while the Coinbase Premium gauge signaled weak U.S. demand.
  • The downturn is linked to investor risk aversion amid internal Fed division on rate cuts and over $1.8 billion in ETF outflows since October.

A sharp, broad-based sell-off hit cryptocurrency markets, dragging Bitcoin down 5.4% and sending related stocks and exchange-traded funds sharply lower in Wednesday trading. The decline was driven by weak U.S. investor demand, persistent uncertainty over the Federal Reserve's interest rate path, and a broader shift away from risk assets.

Crypto miners bore the brunt of the selling pressure. Bitfarms Ltd. fell 8.3%, Marathon Digital Holdings dropped 7.7%, and Riot Platforms declined 5.6%. Hut 8 Mining slid 6.3%. The leading U.S. exchange, Coinbase Global Inc., wasn't spared, its shares falling 5.2%. The ProShares Bitcoin Strategy ETF (BITO) and the iShares Bitcoin Trust (IBIT) each fell approximately 5%, reflecting the direct pressure on Bitcoin itself.

The market's weakness coincides with a notable internal division at the Fed, where policymakers are reportedly split on whether to proceed with a rate cut in December. This uncertainty, coupled with recent economic data pointing to persistent inflation and a softening labor market, has soured investor sentiment. "The market is in a classic risk-off mode," said one trader who asked not to be named. "Until there's clarity from the Fed, crypto and other growth-sensitive assets will remain under pressure."

A key indicator of U.S. retail demand, the Coinbase Premium, has remained negative for its longest streak since April, according to market data. This suggests domestic buyers are stepping back. Concurrently, bond yields have risen, further diminishing the appeal of speculative assets like cryptocurrencies. Since the Fed's October meeting, net outflows from spot Bitcoin ETFs have exceeded $1.8 billion, according to people familiar with the flows, a significant reversal from earlier inflows.

For mining companies, the falling Bitcoin price exacerbates existing pressures from high energy costs, squeezing margins. Several firms have recently reported declining revenues, and the sector's focus has shifted to cost-cutting and operational efficiency. Some are exploring diversification, including potential pivots to AI-related data center services, though these are long-term strategies that offer little immediate relief.

Attempts to reach spokespeople at Coinbase, Marathon Digital, and Bitfarms for comment were not immediately successful. The sell-off extended beyond U.S. markets, with Hong Kong's crypto sector also facing losses ahead of a major local exchange's planned IPO.

Correction: An earlier version of this article misstated the timeframe for the Coinbase Premium indicator. It has been negative for its longest streak since April 2025, not April 2024.