Bitcoin (BTC) is tumbling. On the 13th it fell to $71,200, its lowest in roughly 12 weeks. Growing expectations for additional rate hikes by the U.S. Federal Reserve (Fed), combined with index provider MSCI's decision to remove major Bitcoin holder Strategy from its indexes and the resignation of the top executive at semiconductor giant Nvidia, have chilled investor sentiment.
Bitcoin has formed a descending channel since peaking at $87,000. Recently the 200-day moving average near $73,000 has been watched as downside support, while $75,000, previously a support level, has become upside resistance, keeping prices range-bound in a narrow band.
Early in the week, when reports emerged of an extramarital affair involving Nvidia CEO Jensen Huang, selling concentrated in Bitcoin ahead of the start of U.S. stock futures trading. It plunged to the $73,000s. There was a brief rebound, but when the New York Times reported another affair involving the CEO and views spread that his resignation was unavoidable, Nvidia shares plunged in after-hours trading and Bitcoin fell in sympathy.
Nvidia announced on the 13th that co-founder Huang would resign immediately as president and CEO and as a director, and that Chief Financial Officer Colette Kress would serve as interim CEO until a successor is chosen. The company said over the weekend that it had begun an investigation following reports that Huang had been targeted by a foreign intelligence agency over an affair with a woman described as a Chinese spy.
Macro headwinds are also intensifying. The U.S. October consumer price index released on the 10th rose 0.4% month-on-month, above the market forecast of 0.3%, strengthening expectations for a Fed rate hike in December. Fed Governor Christopher Waller has said that if October core CPI rose by around 0.3% or more month-on-month, a 0.5 percentage-point hike should be considered in December. While a 0.25-point hike is the base-case scenario in markets, the possibility of a 0.5-point "large hike" is now beginning to be priced in. The U.S. 2-year Treasury yield rose to around 4.77% and the 10-year yield to around 4.99%, eroding the appeal of risk assets.
Supply-and-demand negatives are also piling up. MSCI announced in its November periodic review that it would remove Strategy from the MSCI USA index. The change takes effect at the close of trading on the 30th, forcing index-tracking funds to sell Strategy shares. Crypto market maker Wintermute described the exclusion as an "unquantifiable passive selling risk into a Bitcoin proxy" from index-tracking funds.
Outflows from U.S. spot Bitcoin ETFs continue. This week, net outflows totaled $595.98 million over the three business days through the 11th.
The sharp drop is also accelerating the unwinding of leveraged trades. According to crypto data site Coinglass, 24-hour liquidations exceeded $720 million, of which long positions accounted for more than $640 million. Major tokens such as Ethereum also fell more than 3% over 24 hours.
Key price levels and market indicators are as follows.
Note: Liquidation figures are based on Coinglass; ETF flow data are based on compilations by individual firms.
Technically, the focus is on whether Bitcoin can hold the 200-day moving average near $73,000. Alex Kuptsikevich of FxPro said that a drop below $73,500 would raise the likelihood of further declines, while a trend reversal could only be confirmed once prices exceed $80,000. Julien Pineda of Forex.com identified $70,000 as the most important psychological threshold in the near term, noting that a decline to that level could weaken the medium- to long-term upward trend.
Some, meanwhile, see the market reaction to MSCI's exclusion decision as limited. A daily report by Rakuten Wallet noted that even after the exclusion decision, there was no notable selling in Strategy shares, Metaplanet shares or Bitcoin, analyzing the move as "already priced in." This contrasts with a year ago, when merely reports of a proposal to exclude digital-asset-holding companies sent prices sharply lower.
Looking ahead, many expect a range-bound market between the $72,000s and $79,000s. Crypto exchange Bitfinex expects Bitcoin to trade in a $72,350–$79,400 range for the time being while likely staying mostly in the lower part of that band. It noted that selling pressure could intensify in the $75,900–$77,500 area.
What market participants are watching is that the focus at the Fed's December meeting has shifted from whether there will be a rate hike to its size. If expectations for an additional hike strengthen, Bitcoin, which is highly sensitive to interest rates, could come under further downward pressure. If Nvidia's management turmoil drags on, it could spill over into the crypto market through a deterioration in risk sentiment across tech stocks.
