Today's article will cover:
Bitcoin’s Drawdown Is Being Compounded by the Nasdaq’s Pullback
No Clear ETF Support for Bitcoin Around $100K
Market Doubt About December Rate Cuts Is Raising Downside Risk
What links all three is a shift in the market’s risk appetite. Equity momentum has cooled, ETF demand is hesitant, and the Fed outlook has become uncertain again. When these forces align, Bitcoin tends to lose its bid and drift lower until clarity returns.
Bitcoin is getting pushed back below $95K as the Nasdaq 100 loses momentum. These are difficult conditions for Bitcoin. Historically, BTC’s returns tend to be positively correlated with the Nasdaq 100, and that correlation strengthens when the Nasdaq posts sharp negative daily moves.
The chart below shows both drawdowns. Bitcoin began a timid recovery in late October when the Nasdaq was pushing to new highs. But once the Nasdaq slipped into another mild pullback, Bitcoin’s bounce stalled and the downtrend resumed.
That weakness is now colliding with other challenges:
Institutional investors have been deleveraging.
Public companies are no longer buying Bitcoin at the pace they used to.
And there is still uncertainty around the Fed’s next step, something we will discuss in the third section.
Bitcoin is now 25% below its all-time high. That’s not as deep as the February-March drawdown, when BTC fell 30% under similar conditions:
The Nasdaq was in a deep drawdown.
Investors were on edge about U.S. tariffs.
Markets doubted whether the Fed would cut rates.
Back then, conditions eventually improved and both U.S. equities and Bitcoin resumed their bull market. Today, we are in another period of high uncertainty. That is not the kind of environment where Bitcoin typically begins a recovery. We expect more downside risk in the current conditions.
Bitcoin’s recovery attempt stalled the moment the Nasdaq slipped into its own drawdown. BTC’s downside tends to persist until equity markets stabilize and regain upward momentum.
No Clear ETF Support for Bitcoin Around $98K
As we discussed earlier this week, the market is still working through a deleveraging phase, and that makes it harder for capital to rotate into Bitcoin. The deleveraging started weeks ago, but the impact is only now showing up in the data. That shift alone is enough to cancel our hope that Q4 would bring a strong wave of fresh institutional buying.
In this environment, Bitcoin sits too high on the risk curve for most institutions. With money managers turning cautious, risk-on exposure is being trimmed rather than increased. We’ll only know the deleveraging phase is ending once lagging indicators like the National Financial Conditions Index start to roll back down.
But for now, we can judge the outcome directly: ETF flows show very little demand for Bitcoin even at the $100K level. After the six-day outflow streak that pushed BTC down to this area, we’ve seen a mix of small inflows and outflows, nothing close to a sustained run of buying.
Until we see at least a solid week of inflows, it’s hard to argue that Bitcoin has found durable support here.
The long sequence of outflows has ended, but ETF demand remains weak. Without a multi-day run of inflows, institutional support around $97K is still missing.
Market Doubt About December Rate Cuts Is Raising Downside Risk
One of the main reasons risk-on assets are struggling again is that the market no longer knows what the Fed is going to do. With very limited U.S. economic data after the month-long government shutdown, investors have been forced to rely mostly on public comments from Fed officials to guess whether rate cuts are still on the table.
Now, the Fed keeps saying its decisions are data-driven. If you take that at face value, then acting without reliable data means doing nothing in December. But that’s a sharp contrast with where expectations stood just a few weeks ago, when the market was pricing a near-certain 25bps cut and even anticipating more easing in 2026 than the Fed had signalled.
We’ve already warned that a Fed surprise in the opposite direction of market expectations could have sharp negative consequences. And that’s exactly the setup forming now: a crisis of confidence. The probability of a December rate cut has collapsed from 90% to roughly 50%, and that reversal is already weighing on risk-on assets, including Bitcoin.
The bigger risk is what happens if the Fed leans hawkish in December. Nothing in the data so far points to an end-of-cycle bear market, but a hawkish pivot against market expectations could easily push us closer to that scenario. It’s something worth monitoring closely.
Rate-cut expectations for December have collapsed from 90% to roughly 50% in under three weeks. This swing in policy uncertainty is a major headwind for Bitcoin and other risk assets.
This article is for information and education only and is not investment advice. Crypto assets are volatile and high risk. Do your own research.
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