Bitcoin, Ethereum, and XRP Tumble. What’s Driving The Latest Crypto Crash.

Bitcoin has plummeted in recent weeks amid a rotation away from risk assets. (PAT BATARD/Hans Lucas/AFP via Getty Images)

Key Points

• Bitcoin fell 5.6% to $97,204 in 24 hours, trading 30% below its early October record high.
• Ethereum, Solana, and XRP plunged 9.1%, 8.3%, and 8.7% respectively over the past 24 hours.
• Investors are selling risk-on assets due to AI valuation worries and doubts about a December Federal Reserve rate cut.

Bitcoin was plummeting even deeper into a bear market on Friday, with cryptocurrencies taking a battering as investors rotated away from risk-on assets.

Bitcoin was down 5.6% to $97,204 over the past 24 hours, according to data from CoinDesk. The world’s largest token is now trading 30% off the record high it hit in early October.

Ethereum plunged 9.1%, Solana dropped 8.3%, and XRP fell 8.7% over the past 24 hours, per data from the Kraken crypto exchange.

Created with Highcharts 9.0.1Sources: CoinDesk (Bitcoin); Kraken (Ethereum,​Solana, XRP)

Created with Highcharts 9.0.1BitcoinXRPEthereumSolanaNov. 11Nov. 14-17.5-15.0-12.5-10.0-7.5-5.0-2.502.55.0%

Two factors were driving the brutal selloff. First, investors are opting to dump risk-on assets, including tech stocks and cryptos, amid worries about lofty artificial-intelligence valuations. The tech-heavy Nasdaq Composite index slumped 2.3% on Thursday, for its worst session in more than a month. Nasdaq futures pointed 0.9% lower ahead of the open Friday.

Second, the market is starting to doubt whether the Federal Reserve will cut interest rates in December, with multiple officials striking a cautious tone on Thursday. Traders are now pricing in a 50% chance that the central bank lowers borrowing costs by a quarter-point next month, down from 67% a week ago, according to the CME FedWatch tool.

If the Fed doesn’t cut, that would spell further pressure for cryptos. When borrowing costs are higher, the digital tokens become less appealing relative to safer, interest-bearing investments, like bonds and savings accounts.

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