Bitcoin slumps again as traders brace for pivotal US data

Bitcoin’s dramatic recent slide gathered yet more momentum at the start of December, with the cryptocurrency plunging as low as $85,400 early Monday morning.

The digital asset fell about 5% overnight, appearing to resume a six week-long tumble that started shortly after it reached a record high of $126,000 in late October.

Bitcoin has lost nearly one-third of its value since that point, after the market saw a significant and prolonged round of liquidations and sell-offs in late October and November. Traders had suggested things might have stabilized last week amid a brief pause in the selling, but Monday’s fresh slide appeared to dash those hopes.

“Bitcoin tends to be a leading indicator for overall risk sentiment right now, and its slide does not bode well for stocks at the start of this month,” said Kathleen Brooks, research director at trading firm XTB. She noted that there is no obvious driver, but that investors might be concerned about an uncertain outlook into the year-end — as noted by recent VIX scores, which measure market volatility.

Traders are awaiting several key economic data releases in the U.S. this week. While markets are broadly expecting a rate cut at the Federal Reserve’s next meeting on Dec. 10, that could yet be derailed by unfavorable data on jobs and inflation, both of which could give some indication of the speed and depth of interest rate cuts in the coming months.

“It’s a risk off start to December,” said Sean McNulty, APAC derivatives trading lead at FalconX, per Bloomberg. “We expect the structural headwinds to continue this month. We are watching $80,000 on Bitcoin as the next key support level.”

It comes S&P Global Ratings last week downgraded its assessment of the stability of USDT, the world’s largest stablecoin, warning that a fall in Bitcoin’s value could leave it without enough collateral. Tether, the company that operates USDT, said it “strongly disagrees” with the ratings agency.

Other major cryptocurrencies also fell Monday, with Ethereum and Solana slumping by more than 5%.