Bitcoin dropped to around $68,500 on Friday, marking its lowest level in 12 weeks. The decline erased much of the cryptocurrency's late-summer recovery, though it remains about 16% above its late-June low near $59,000. The sell-off was driven by renewed U.S. inflation concerns and investor withdrawals, with Bitcoin down 4.5% over 24 hours and 9.5% for the week. Ethereum and Solana also saw declines, trading near $1,925 and below $80, respectively.
Inflation worries have heightened ahead of the Federal Reserve's December meeting. Chicago Federal Reserve President Austan Goolsbee warned that inflation pressures extend beyond energy and tariffs, citing rising services and medical costs, as well as demand from AI data centers. While Goolsbee did not explicitly endorse a December rate hike, Fed Governor Christopher Waller supported raising interest rates by at least 25 basis points. Waller also set a condition for a more aggressive move, which was met by the latest core CPI data showing a 0.3% increase.
Markets now reflect a 91.9% probability of a quarter-point rate hike and an 8.1% chance of a half-point increase. Higher interest rates make traditional investments more attractive, reducing the appeal of speculative assets like Bitcoin. Additionally, U.S. spot Bitcoin ETFs have seen six consecutive sessions of net outflows, totaling approximately $1.49 billion between November 5 and November 12, adding to the selling pressure.
Technical indicators suggest a bearish short-term trajectory for Bitcoin. Its relative strength index (RSI) has dropped to 25.4, indicating oversold conditions, while the average directional index (ADX) stands at 25.3, signaling strong bearish momentum. Immediate support is around $67,650, with deeper support near $64,000. On the upside, Bitcoin needs to recover $70,815 and $72,775 before challenging stronger resistance zones. Traders are watching key macroeconomic events, including the Fed's November 18 meeting minutes and the November 25 PCE inflation report, for further guidance.