Crypto Market Slides Amid Macro Concerns, Heading for 9% Weekly Drop

Coins slide across the board 

Total crypto market capitalization declined 5.4% between Thursday 12:00 UTC and Friday 07:00. Bitcoin (BTC) fell about 5.5%, while the top altcoins also slumped, according to CoinMarketCap data:

• Ether (ETH) –8.0%
• XRP –6.6%
• BNB –4.5%
• Solana (SOL) –8.0%

Bitcoin slipped below $100,000 for the second time this month, trading as low as $95,900 on Coinbase Friday morning, the lowest since May.

The CoinMarketCap Fear and Greed Index worsened to 22/100, indicating "fear." At 20, the crypto market would be considered in a state of "extreme fear" – a term used widely in the industry.

ETF outflows

A key driver, and illustration, of the ongoing crypto downturn is the steep reduction of interest in exchange-traded funds (ETFs). Bitcoin ETFs have suffered net withdrawals of almost $620 million this week, bringing the total net outflow to about $1.8bn in November, according to data from Farside Investors.

Bitcoin ETFs saw net outflows of $867mn on Thursday alone, the largest daily withdrawal since February. ETH funds had net outflows of about $260mn, the most since mid-October.

While financial institutions from New York to Hong Kong have expressed a growing interest in crypto this year, ETF outflows are an indication of weakening appetite for digital assets.

According to CoinGlass data, nearly 250,000 traders were liquidated in the past 24 hours, wiping out $1.1bn, amid the market correction.

Macroeconomic backdrop

The US Federal Reserve seems increasingly unlikely to make a further interest rate cut as policymakers on its Federal Open Market Committee (FOMC) weigh economic indicators around jobs and inflation.

The Fed governors, like many other central bankers, financiers and investors, are in a spin amid a lack of clarity about the timing and content of US economic data releases. The malaise follows the 43-day US federal government shutdown – the longest ever recorded – that ended earlier this week.

While chances of a further rate cut by the Fed sat at over 60% on Thursday, this figure dropped to 49.6% as at Friday morning, according to the CME’s FedWatch tool.

Equities drop

US stocks also had a rough day on Thursday as they priced in the lower chances of a rate cut. The S&P500 slumped 1.7% – the worst day in over a month. In the UK, the FTSE 100 experienced its biggest daily decline since April and posted a further drop of 1.7% as at 11:58 on Friday. European and Asian equities fell by similar amounts while spot gold slipped 1%, trimming its advance for the week.

Adding to the strain, AI-linked tech stocks have continued to sell off amid mounting pessimism about soaring capital expenditures – now heavily financed by debt – which has dampened broader market sentiment.

China bank lending 

The downturn in crypto was further intensified by a negative surprise in China’s monetary data: banks issued just 220bn yuan ($30.9bn) in new loans last month, far below the 500bn yuan expected, according to a Reuters poll. As Capital Economics’ Leah Fahy noted in a commentary on the firm's website: “Bank loan growth continued to weaken in October, with the consumer loan subsidy scheme failing to put a floor under household loan growth.”