Bitcoin, the largest digital asset, has faced its first weekly decline since Donald Trump’s election victory. The cryptocurrency dropped by more than 7% for the week ending Monday morning in Singapore, reflecting cautious market sentiment influenced by the Federal Reserve’s monetary policies.
Federal Reserve’s Impact on Bitcoin
The Federal Reserve’s hawkish stance delivered a third consecutive interest-rate cut but signaled a slower pace of easing to manage inflation. This move dampened the optimistic momentum fueled by Trump’s pledge of crypto-friendly regulations and a proposed national Bitcoin reserve.
Key impacts:
- Bitcoin declined over 7%, marking its steepest drop since September.
- A broader crypto market index, including Ethereum and Dogecoin, fell by 10%.
- US exchange-traded funds witnessed record Bitcoin outflows.
Sean McNulty, director of trading at Arbelos Markets, highlighted potential risks:
“We should hold the $90,000 level for Bitcoin into year-end, but breaking below it could trigger further liquidations.”
Price Trends and Expert Predictions
Bitcoin traded at approximately $94,344, nearly $14,000 below its all-time high of $108,000 recorded on December 17. However, the token remains 37% higher since the presidential election.
David Lawant, head of research at FalconX, outlined a bullish outlook for 2025:
“Choppy price action in the near term is likely, but the most probable scenario is a bullish trajectory heading into Q1 2025.”
Factors to watch:
- The largest crypto options expiry on December 27 may bring heightened volatility.
- A low-liquidity environment could amplify price swings as the year ends.
MicroStrategy and Market Dynamics
MicroStrategy Inc., a leveraged Bitcoin proxy, continues to play a pivotal role in the cryptocurrency market. Traders are closely observing whether the company will sustain its weekly Bitcoin purchases and trigger new price movements.
Conclusion
Despite its recent decline, Bitcoin’s long-term trajectory remains optimistic as experts predict a bullish trend for early 2025. However, market volatility and liquidity concerns could lead to short-term fluctuations. Investors are advised to stay vigilant as year-end developments unfold.
