Bitcoin News Today: Bitcoin's House of Cards: Fed Policy, MSCI Scrutiny, and Leverage Trigger Collapse

Bitcoin's sharp decline, with prices nearing seven-month lows, has sparked widespread analysis of the forces driving the sell-off. Market participants and analysts point to three primary factors: shifting Federal Reserve policy expectations, regulatory scrutiny of Bitcoin-focused companies, and structural weaknesses in leveraged trading.

The Federal Reserve's diminishing likelihood of rate cuts has intensified pressure on risk assets. As of Nov. 20, 2025, the probability of a December rate cut had collapsed to 30%, down from 98% a month earlier, according to CME's FedWatch tool. This reversal reflects persistent inflation concerns and a data blackout caused by the government shutdown, which delayed critical employment reports. "Bitcoin remains highly sensitive to shifts in monetary policy expectations," said Carolane De Palmas of ActivTrades, noting that the cryptocurrency has dropped 30% from its October peak amid the Fed's hawkish stance.

Compounding the uncertainty, index provider MSCI is reviewing whether to exclude Bitcoin-heavy companies from major equity benchmarks, a move that could trigger billions in passive outflows. Firms like MicroStrategy (now Strategy), which holds 649,870 Bitcoin, are under scrutiny for resembling investment vehicles rather than traditional operating businesses. JPMorgan estimates that removing Strategy from the MSCI USA Index alone could force $2.8 billion in sell-offs, with total outflows reaching $8.8 billion if other indices follow suit. The company's market value now trades at just a 1.1 premium to its Bitcoin holdings, a stark contrast to its peak multiple of 2.7 in 2024.

Market structure vulnerabilities have also amplified volatility. Over $1.27 billion in leveraged liquidations have exposed weaknesses in the crypto ecosystem, particularly as high interest rates increase the cost of maintaining leveraged positions. Regulatory developments, including the Commodity Futures Trading Commission's expanded oversight of spot markets, have added to instability. Meanwhile, Bitcoin's correlation with risk assets like tech stocks has deepened, with both facing headwinds as investors rotate into safer assets like U.S. Treasuries.

The confluence of these factors has created a fragile environment. If the Fed delays easing, Bitcoin could test support levels below $85,000, while MSCI's January 2026 decision on index classifications looms as a pivotal event for companies like Strategy according to analysis. For now, the market remains in a holding pattern, balancing hopes for policy relief against growing structural risks.