This month, Bitcoin has fallen below $90,000 again. Remember, less than two months ago, it surged to a record high of $126,000 in early October. And now? For the first time in over seven months, it has dropped below $90,000, a decline of nearly 30%, wiping out all gains since the beginning of the year.

Market reactions are very consistent: everyone is watching the Federal Reserve. The probability of a rate cut in December has dropped from a high likelihood to a 50-50 chance, and this is the real trigger behind this sharp decline. It’s not about technical analysis or news; it’s about the sudden shift in liquidity expectations.

How does the Federal Reserve influence the crypto market so much? Let’s look at a few angles. The most straightforward is interest rates—when the Fed raises rates, Treasury yields go up, increasing the opportunity cost of holding Bitcoin. Saving money to buy crypto becomes less attractive compared to safely earning interest on U.S. bonds. This inverse relationship is very direct.

Deeper down is quantitative tightening. The Fed is not only raising interest rates but also shrinking its balance sheet—essentially pulling money out of the financial system. Major institutions like Morgan Stanley explicitly state that if the Fed maintains the current stance at the December meeting, dollar liquidity will tighten further, and assets without cash flow, like Bitcoin, will be sold off first.

Risk appetite is also a key factor. When the Fed adopts a hawkish stance, investors start to withdraw systematically from high-risk assets. This isn’t just rational analysis; it’s a collective shift in market sentiment. The crypto market tends to react fastest and most aggressively to such expectation changes.

This crash once again confirms a reality: the fate of crypto assets is closely tied to global liquidity. A single policy adjustment by the Federal Reserve could be the trigger that causes Bitcoin to fall from 120,000 to 90,000.