Bitcoin crashed 6.4% to $65,708 during Wednesday's Asian session, marking a sharp reversal after the asset traded near $70,000 just days earlier. Ether declined alongside BTC, breaking below the $1,900 level as risk-off sentiment gripped crypto markets.
The selloff arrived despite a broader equity rally. The MSCI All Country World Index hit fresh all-time highs on AI enthusiasm, with major indices climbing to record territory. This decoupling reveals growing divergence between traditional markets and digital assets heading into a critical period for rate expectations.
Bitcoin's decline erased roughly $4,000 in value within 24 hours, returning the asset to levels not seen since late November. Ether's slip below $1,900 came as broader altcoin weakness pressured the entire market. On-chain data showed elevated exchange inflows during the dump, suggesting retail and institutional liquidations drove the cascade lower.
The timing proves notable given macro conditions. Fed policy remains in focus with markets pricing probabilities around future rate holds and potential cuts. Bitcoin historically struggles when traditional equities rally simultaneously on AI momentum, as capital rotates into high-growth tech stocks at the expense of non-yielding assets.
Traders pointed to technical resistance breaks as another factor. BTC's failure to hold above the $69,000 level triggered stop-loss cascades down toward $66,000. Support at $65,000 loomed as the next critical floor, with liquidations compounding each breakdown.
The plunge contradicts recent narrative strength around Bitcoin ETF inflows and institutional accumulation. Spot Bitcoin ETF products logged modest outflows during the session, though long-term positioning remained constructive relative to 2024 levels.
Crypto volatility spiked into the 40s on annualized basis, well above equity implied vol. Whether this dip represents profit-taking ahead of year-end or signals deeper weakness depends on macroeconomic data and Fed communications in coming weeks. The divergence between record equity highs and BTC weakness underscores growing correlation