Bitcoin Falls 1.4% Below $79,300 as Funds See $772.4 Million in Outflows
Key Facts
Bitcoin fell by as much as 1.4% to below $79,300 in Asian trading on October 26 before recovering some losses to trade near $80,000, according to a Bloomberg report cited by The Business Times. The move came ahead of the Federal Reserve meeting, as investors grew more averse to riskier assets. EL7’s daily closing data show that Bitcoin closed at $80,888.16 on October 24, then at $80,154.09 on October 25, before recording $80,218.71 on October 26. Daily closes therefore remained above the $80,000 threshold on all three days, despite the intraday drop below it in Asian trading. The divergence between intraday trading and daily closes comes as markets await the rate decision and assess investment flows into funds.
Investors withdrew $772.4 million from U.S.-listed spot Bitcoin funds on the preceding Thursday and Friday, following net inflows of more than $1 billion earlier in the same week, according to the report. The move reflects a rapid reversal in flows over a few days, alongside Bitcoin’s decline below $80,000 during Asian trading. The report linked weakness in cryptocurrencies to risk aversion ahead of the Fed meeting, as well as investor concerns about heavy spending related to artificial intelligence. Those concerns extended to what the report described as the AI trade, as markets focus on monetary policy decisions. The available report did not provide another figure for fund flows or a comparison over a longer period.
Caroline Mauron, co-founder of Orbit Markets, said Bitcoin had held up relatively well against concerns about AI debt. She added that the market’s focus was turning to the Fed meeting, followed by the U.S. midterm elections, saying: "The market's focus is now on the Fed meeting, followed by the U.S. midterm elections." That puts the central bank’s decision among the immediate events traders are watching, while the elections remain a later milestone on the market’s calendar. The Federal Open Market Committee meeting begins on October 27 and runs through October 28, with the press conference scheduled for the final day, according to the Fed’s official calendar. The meeting follows September’s decision to raise rates by a quarter percentage point to a range of 3.75%-4.00%, with the committee approving it by a vote of 12-0.
A Reuters poll of 100 economists conducted between October 16 and 20 found that 94 expected the Fed to hold its rate range at 3.75%-4.00% at the October meeting. These remain respondents’ expectations; the decision will come after the committee meeting scheduled for October 27 and 28. By contrast, all 100 economists expected a rate increase in December, putting the subsequent policy path at the center of investors’ calculations. The Fed raised rates by 25 basis points in September, and the committee voted unanimously for the decision, according to the Reuters report. This sequence gives markets the upcoming October decision and the expected December move as reference points for tracking borrowing costs, while Bitcoin trades near $80,000.
Expected economic data include the September estimate for personal consumption expenditures inflation, the Fed’s preferred inflation measure. Economists expected the index to rise to 3.7% year over year from 3.4% in August, according to the Associated Press. They also expected U.S. gross domestic product to post preliminary growth of 1.7% in the third quarter, compared with growth of 2.2% in the second quarter. These estimates put inflation and growth among the data markets will monitor around the central bank meeting. While the available Reuters poll showed no change in the expectation that rates would hold at the October meeting for most respondents, all participants expected a rate increase in December.