Markets tumble as doubts grow over December rate cut

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Crypto markets are ending the week in the red, with BTC falling below $95,000 after one of the worst days ever for bitcoin ETF flows.

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Risk assets sold off as doubts loom over a December rate cut, with BTC down -1.87% yesterday and tumbling briefly below $95,000 this morning, extending its losses. US equities also saw investors de-risk, with the Nasdaq and S&P 500 down -1.74% and -1.37%, respectively. Meanwhile, gold’s relative strength was notable, closing the day almost flat.

Expanding on the macro side, Fed members are pushing back against a December cut, especially given the lack of new data on the jobs and inflation fronts due to the government shutdown. Minneapolis Fed President Neel Kashkari said yesterday he didn’t support the last interest rate cut, noting he’s undecided on the best course of action for next month’s policy meeting. The chart below effectively illustrates the sudden shift in market expectations. As of Nov. 13, the CME FedWatch Tool was pricing a 25 bps rate cut at just a 51% probability, compared to 63% the day before and over 95% a month ago.

Bitcoin has been hit especially hard by recent macro uncertainty, with bitcoin ETFs experiencing their second-worst day ever, in terms of net flows, yesterday. Bitcoin ETFs saw almost $870 million in outflows, suggesting that we’ll close the third consecutive week with negative flows. The last time bitcoin ETFs experienced three or more consecutive weeks of outflows was between February and March of this year, with BTC dropping below $80,000. The chart below shows bitcoin’s weekly ETF flows by product, with this week still pending inclusion.

Speaking of ETFs, one of the largest issuers (Grayscale) filed for an IPO yesterday. The filing revealed declining financials, with a 20% year-over-year decline in revenue for the first nine months of the year. Notably, AUM was also lower on Sept. 30 than a year prior, despite BTC rising 80% during the same period. Since bitcoin ETFs began trading in 2024, Grayscale’s GBTC has seen almost $25 billion in cumulative net outflows.

Finally, regarding cross-sector performance, every crypto index we track was negative on the day, with the sole exception of RWA (+1.2%). The worst-performing indices were Crypto Miners (-6.6%), Solana Eco (-5.9%), and Crypto Equities (-5.8%). The fact that two of the worst-performing indices were equities is a further indication of broader risk-off sentiment driven by macro concerns.