Source: CNN, Business Insider

Written by: John Towfighi, Jennifer Sor

Translated by: Deloris

Bitcoin and the stock market are experiencing severe volatility—investors indicate that more turmoil may be on the horizon.

Since hitting an all-time high in late October, the tech-heavy Nasdaq index has fallen 6.6%, with approximately $2.6 trillion in market value evaporating during the decline. The Wall Street fear index VIX surged 10% on Tuesday. CNN's Fear and Greed Index is hovering in the "extreme fear" zone, dropping to its lowest level since early April.

"Bitcoin is struggling partly due to selling pressure from long-term holders taking profits, and partly due to uncertainty surrounding Federal Reserve policy, liquidity conditions, and other macroeconomic factors," said Gerry O'Shea, Global Market Insights Director at Hashdex Asset Management.

Compounding the issue is the uncertainty over whether the Federal Reserve will cut interest rates next month, which is creating risk-averse sentiment that is putting pressure on Bitcoin, a highly speculative and volatile asset. ActivTrades analyst Carolane De Palmas stated that if the Fed's rate cut is smaller than expected, current investors are already pricing in this scenario, which would be negative news for risk assets like Bitcoin.

"The pullback in Bitcoin is part of a broader shift in risk sentiment," said Haider Rafique, Global Managing Partner at cryptocurrency exchange OKX.

In fact, since U.S. President Trump reignited the trade war with China on October 11, leading to a flash crash in Bitcoin, the cryptocurrency has struggled to achieve a substantial recovery. Peter Chung, head of Presto Research, noted that some buyers and sellers have exited the market since then, resulting in reduced liquidity for Bitcoin and making its price more susceptible to fluctuations.

The reason is that investors are optimistic about the Trump administration implementing favorable regulations for cryptocurrencies. Trump has been a strong supporter of the cryptocurrency industry, advocating for relaxed regulations and legislation that benefits cryptocurrencies. The GENIUS Act, passed by Congress, was signed into law by Trump in July, ushering in a new era of stablecoin regulation.

Against this backdrop, although tech stocks are also under pressure, investors are buying on dips. Nvidia's stock price fell as much as 3.36% on Friday but ultimately closed up 1.77%. On Monday, Nvidia's stock price dropped as much as 3.08% but ultimately closed down 1.88%.

Some cryptocurrency investors remain optimistic. Bitcoin had dropped to around $74,500 in April but surged to over $126,000 in early October.

Arthur Hayes, co-founder of BitMEX, is even more optimistic, believing that Bitcoin may first dip to $80,000 to $85,000 before rising to $200,000 to $250,000 by the end of the year.

In a report on Monday, she wrote that if Bitcoin closes below that threshold for two consecutive weeks, it would "signal a concerning collapse."

This platform, which has shut down due to financial difficulties, was stated by founders Skirmantas Januškas and Dragos Dunica to be "economically unsustainable to operate a platform of this scale in the current environment."

Currently, Bitcoin is priced at $91,398, and ETH is priced at $3,075.

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