Bitcoin fell below the $70,000 mark on Friday for the first time since mid-August, extending its prolonged decline as growing expectations of Federal Reserve interest rate hikes and concerns over Strategy’s potential removal from MSCI indexes weighed on investor sentiment.
The world’s largest cryptocurrency dropped 4.94 percent to $69,372 by 12:13 GMT, bringing its weekly losses to 8.67 percent. It was also on track to record its sixth consecutive week of declines.
Fed rate hike expectations add pressure on Bitcoin
The latest Bitcoin sell-off adds to a difficult period for digital assets, which have faced mounting pressure since October amid shifting monetary policy expectations, regulatory uncertainty and concerns surrounding major institutional Bitcoin holders.
Expectations of further monetary tightening in the U.S. have emerged as a major headwind for cryptocurrencies.
Markets are increasingly anticipating that the Federal Reserve could raise interest rates as early as December, following October consumer inflation data that came in hotter than expected.
According to CME FedWatch, traders were pricing in between 25 and 50 basis points of rate increases at the Fed’s December meeting.
Higher interest rates generally weigh on speculative assets such as cryptocurrencies by tightening liquidity and making relatively safer investments, including government bonds, more attractive.
Bitcoin has historically struggled in higher-rate environments, as tighter financial conditions tend to reduce investors’ willingness to take risks.
Strategy’s MSCI exclusion raises concerns over Bitcoin holdings
Another source of uncertainty stems from MSCI’s decision to exclude Strategy, the world’s largest corporate Bitcoin holder, and similar companies from its benchmark indexes, effective November 30.
While the decision does not create an immediate requirement for Bitcoin sales, it could restrict Strategy’s access to capital, which has been a central source of funding for its extensive cryptocurrency purchases.
The development has raised concerns that the company could eventually be forced to sell some of its Bitcoin holdings to meet growing debt and capital obligations, particularly if its ability to secure fresh financing becomes more limited.
Such a move could introduce additional selling pressure into an already weakened market, given Strategy’s substantial exposure to the cryptocurrency.
U.S. regulatory uncertainty adds to market caution
The outlook for cryptocurrency regulation in the U.S. has also become a concern for investors following the Democratic Party’s gains in both chambers of Congress.
Several prominent Democratic lawmakers have advocated stricter anti-money laundering requirements and stronger risk management rules for the industry.
The possibility of more stringent legislation has added another layer of uncertainty to the sector, with investors assessing how a tougher regulatory environment could affect cryptocurrency businesses and institutional participation.
Read: Bitcoin price drops 9 percent in seven days below $73,000 as ETF outflows deepen
Major cryptocurrencies extend weekly losses
The broader digital asset market also remained under pressure on Friday, with most major cryptocurrencies recording further declines.
Ether, the world’s second-largest cryptocurrency, dropped 3.01 percent to $1,961.55, bringing its weekly losses to 12.38 percent.
XRP declined 1.19 percent and was down 13.09 percent over the week.
Among other major tokens, Cardano rose 0.4 percent, while Solana lost 1.75 percent. BNB recorded a steeper decline of 2.97 percent, extending its weekly losses to 7.74 percent.
The widespread declines highlight the pressure facing the cryptocurrency market, as tighter monetary policy expectations, regulatory concerns and institutional financing risks combine to weaken investor appetite for digital assets.
