Bitcoin Slips Further Into a Bear Market. What’s Causing Today’s Selloff.

Cryptocurrencies have struggled over the past month, with investors no longer certain that the Federal Reserve will cut interest rates in December. (MLADEN ANTONOV/AFP via Getty Images)

Key Points

• Bitcoin entered a bear market on November 4, falling 20% below its October intraday high of $126,272.
• Bitcoin continued its decline, trading down 22% from its October peak, with other cryptocurrencies also experiencing losses.
• Uncertainty regarding the Federal Reserve’s next move and the impact of the government shutdown are weighing on crypto markets.

Bitcoin slid deeper into bear market territory in Thursday trading, down 22% from its recent intraday high of $126,272 it hit in October. The crypto entered a bear market on Nov. 4 when it fell 20% below that high for the first time.

Ethereum was down 6%, Solana slid nearly 7%, and XRP lost 1.5%.

The downturn is a sign of market uncertainty, after President Donald Trump on Wednesday signed a bill to end the longest government shutdown in history. Investors are struggling to work out how big a catalyst that will be for the market, with stocks also dropping.

Created with Highcharts 9.0.1Sources: CoinDesk (BTCUSD, SOLUSD); Kraken​(ETHUSD, XRPUSD)

Created with Highcharts 9.0.1XRPEthereumBitcoinSolanaNov. 10Nov. 13-10.0-7.5-5.0-2.502.55.07.510.012.5%

The big question for crypto investors is what the Federal Reserve does next. There is a flurry of economic data that is due out now that the government funding impasse has ended, although some may be missing. Traders are pricing in higher odds of a rate hold as a result.

If the data strengthens the case for the central bank to hold interest rates steady next month, then that could weigh on Bitcoin and its peers. When borrowing costs are higher, that makes risk-on assets less appealing relative to yield-bearing investments, such as bonds and savings accounts.

Write to George Glover at george.glover@dowjones.com