Bitcoin hits five-month low amid concerns over Fed's 'in-the-dark' rate decisions

Market uncertainty has surged as a prolonged U.S. federal government shutdown has prevented the Federal Reserve (Fed) from obtaining key economic indicators. With investor sentiment shaken, New York stocks plunged across the board, and Bitcoin (BTC) fell below the $100,000 level again, expanding a corrective phase across risky assets.

On the 13th (local time), the market was mainly triggered by a reduced likelihood of a rate cut in December. According to Bloomberg, the probability of a December rate cut priced into swap markets plunged from 72% a week ago to around 50%.

Fed Chair Jerome Powell recently drew a line saying, "we cannot be certain about additional cuts," and the shutdown has halted entire sets of key economic indicators such as employment and inflation, leaving the Fed unable to provide policy guidance and creating an "in-the-dark" period, which has become a burden. As policy uncertainty deepened, investors moved quickly to reduce risk exposure.

This accelerated Bitcoin's decline. The overlap of Fed policy uncertainty, dollar strength, and risk-off sentiment weakened demand that had been relatively resilient. That day, Bitcoin slid to $98,000 intraday on Binance's Tether (USDT) market, marking its lowest level in about five months since June 22 ($98,200). It later recovered some losses to return above $100,000 after buy flows, but market volatility remains elevated.

Market experts warned that a prolonged shutdown could further increase uncertainty around risky assets. An industry source said, "If the government shutdown continues, the Fed will have to make decisions at the December meeting without sufficient data," adding, "Risk assets including Bitcoin could face another phase of increased volatility for the time being." Barclays also pointed out a weakening of investor sentiment, saying, "Retail trading activity has clearly decreased after the AI rally."

On the stock market, "momentum stocks," which had driven the bull market, took the biggest hit. Bank of America's (BofA) momentum basket plunged 4.7%, recording its largest drop since April. AI bellwethers such as NVIDIA, Broadcom, and Palantir saw 3–6% corrections, and related names like Astera Labs and SanDisk also fell in unison. Global financial institutions including DBS and Morgan Stanley had already warned that "AI valuations are showing signs of overheating."

Names favored by retail investors suffered larger declines. Citigroup's "Retail Favorites" basket, which includes Tesla, SoFi, and Riot Platforms, plunged 6%, marking its biggest drop since April. Meme stock ETFs and leveraged ETFs of bitcoin mining firms posted losses in the 10–20% range, reflecting a sharp cooling of retail buying.