Bitcoin Plunges: Coinbase Uncovers the Cause

Bitcoin Tumbles Below $67,000 Amid Fed Rate Hike Fears and Stablecoin Contraction

Bitcoin’s price has fallen sharply, dropping below the $67,000 mark after failing to hold the $75,500 level and reaching an intraday low of $66,456. The cryptocurrency is now down nearly 12% for the week, a downturn that has triggered approximately $663.83 million in liquidations, with long traders accounting for $533.56 million of that total.

Macroeconomic Headwinds Drive Bitcoin’s Decline

Contrary to speculation that a recent Binance hack was the primary catalyst for Bitcoin’s slide, a report from Coinbase Institutional suggests that shifting expectations around Federal Reserve interest rate policy are the more significant driver. The firm’s analysis points to macroeconomic factors as the principal source of pressure on the digital asset.

Inflation Data Fuels Rate Hike Speculation

October’s inflation data revealed a 0.4% month-over-month increase in the Consumer Price Index (CPI), with core CPI rising by 0.3%. Both figures exceeded economists’ expectations by 0.1 percentage point, bolstering the likelihood of a 25-basis-point Federal Reserve rate hike in December.

Fed Governor Christopher Waller indicated his support for such an increase, which would bring interest rates to the 4%–4.25% range. He also cautioned that a larger 50-basis-point hike could be considered if core inflation surpassed 0.3%. Consequently, markets are now pricing in approximately 64 basis points of Fed rate hikes over the next 12 months, a notable increase from the 37 basis points anticipated earlier in November.

For Bitcoin, a higher interest rate environment makes non-yielding assets less attractive. This is compounded by a strengthening U.S. dollar, with the dollar index climbing to 103.4, its highest level since April 2025.

Stablecoin Supply Shrinks, ETFs See Outflows

The pressure on Bitcoin is not solely confined to interest rate concerns. Coinbase Institutional’s report also highlighted a significant contraction in stablecoin supply, which has decreased by $11.5 billion over the past 30 days, marking the largest decline recorded by the firm.

Furthermore, Bitcoin spot exchange-traded funds (ETFs) have experienced substantial outflows. Since October 30, these outflows have reached a record $3 billion, with November 4 being the sole day to register an inflow of $74.6 million during this period.

Strategic Index Rebalancing Adds to Selling Pressure

Adding to the downward momentum, MSCI has confirmed that MicroStrategy will be removed from its global indexes after November 30. This decision is expected to compel funds that track these indexes to divest approximately $2.8 billion worth of MicroStrategy shares, potentially creating further selling pressure.

Technical Levels and Bearish Outlook

With Bitcoin trading below $67,000, Coinbase Institutional identifies $62,000 as the next critical support level if the $66,000–$68,000 range proves unsustainable. Conversely, a sustained move above $73,000 could pave the way for Bitcoin to retest the $80,000 mark.

Prominent Bitcoin critic Peter Schiff has warned that the current decline could intensify. He suggested that selling pressure might accelerate if Bitcoin falls below $50,000, potentially driving the cryptocurrency towards its 2022 low of under $16,500. Schiff anticipates that momentum could build rapidly once Bitcoin breaks the $50,000 threshold, and he would not be surprised to see a retest of the 2022 low before the end of the year.