Market Sell-Off Hits Bitcoin and Ethereum
The cryptocurrency market has experienced significant selling pressure in recent weeks, leading to the complete erasure of all gains Bitcoin had made since the beginning of the year. Despite perceived pro-crypto policies from the US administration, the market's largest crypto asset has been in a steep decline over the past month.
Bitcoin fell below $90,000 for the first time since an April tariff-driven sell-off, reaching lows of $89,368 earlier on Tuesday. This downturn has effectively wiped out its year-to-date gains of up to 35%, pushing its performance into negative territory, currently around -2% for 2025.
Ethereum, the second-largest asset in the market, is facing similar pressures. It has dropped below $3,000 for the first time in five months, with its year-to-date performance now standing at -8%.
Last month, Bitcoin had reached a new record high above $126,000. This rally was strongly supported by the Trump administration's crypto-friendly policies and a general increase in risk appetite following post-Liberation Day tariff cuts.
Economic Factors Driving Market Uncertainty
According to ActivTrades analyst Carolane De Palmas, the primary driver of market uncertainty stems from growing doubts about the Federal Reserve's planned interest rate cuts in the coming months.
“Due to the US government shutdown, October data may not be released. The Fed will be forced to make decisions with incomplete information. This is a damaging environment for liquidity expectations for Bitcoin and is negative in itself.”
Investors are reportedly beginning to seriously consider the possibility that the interest rate cuts anticipated by 2026 may not occur. This developing sentiment is placing additional pressure on riskier assets such as Bitcoin.
Shifting Risk Appetite Among Investors
Thomas Chen, CEO of Function, notes that traditional finance managers are actively reducing their positions in the market.
Bitcoin's erasure of year-to-date gains has led managers to reduce their risk appetite. The macro outlook, the AI bubble, the outlook for the S&P, and tariffs are being watched much more closely now.
Technical Breakdowns and Future Outlook
Alex Kuptsikevich, chief analyst at FxPro, highlighted a critical technical level that was breached last week.
“A drop below the 50-week moving average at the end of last week triggered selling and confirmed the break of the two-year uptrend. Currently, a pullback towards the 200-week moving average is the most likely scenario for BTC.”