88% Chance of Rate Cut: Why Is Bitcoin Crashing While Silver Soars?
Despite high expectations for a Fed rate cut, Bitcoin is crashing while silver hits record highs due to ETF outflows and supply constraints.Summary
Precious metals, particularly silver which hit a record high, are rallying due to increasing expectations of a Federal Reserve interest rate cut (CME FedWatch shows an 87.6% probability for a December cut) and a weakening dollar. Silver's surge is further amplified by acute supply constraints, including drained inventories and high borrowing costs.
Conversely, Bitcoin, often called "digital gold," is declining, plunging about 30% from its October high. This divergence is attributed to several crypto-specific headwinds, including $3.4 billion in net outflows from US-listed Bitcoin ETFs in November, a recent Yearn Finance hack impacting DeFi sentiment, and fears of a global carry trade unwinding following hints of a potential rate hike from the Bank of Japan Governor. While rate cuts should eventually favor Bitcoin, short-term factors like ETF flows and leverage liquidations are currently dominating its price action, unlike precious metals which are benefiting from independent physical supply shortages.
(Source：BeInCrypto)