Bitcoin Experiences First Weekly Drop Since Trump's Election

Bitcoin has noted its first weekly decline since Donald Trump's victory in the presidential election. This recent downturn reflects the influence of the Federal Reserve's cautious policy measures, which have dampened the initial optimism for the crypto market that was spurred by Trump’s promises of supportive regulations.

Market Overview

As of 9:27 a.m. on Monday in Singapore, Bitcoin was down over 7% during the week, marking its steepest drop since September. Meanwhile, broader cryptocurrency markets, which include various smaller tokens like Ether and popular choices such as Dogecoin, registered an even sharper decline of around 10%.

Impact of Federal Reserve Decisions

Last Wednesday, the Federal Reserve announced a third consecutive interest rate cut, coupled with a warning of a slowdown in the pace of economic easing for the upcoming year, aiming to control inflation. This decision sent ripple effects through global stock markets, resulting in further volatility.

Furthermore, the speculation related to Trump's potential influence was reduced by the Fed's hawkish stance. His initial commitment to friendly cryptocurrency regulations and a national Bitcoin stockpile had previously boosted market confidence. However, record outflows from U.S. exchange-traded funds directly investing in Bitcoin last week have started to exert significant pressure on Bitcoin prices, according to Sean McNulty, the director of trading at Arbelos Markets.

McNulty noted, “We should hold the $90,000 level for Bitcoin into the year end, but if we break below that, it could trigger further liquidations.” He highlighted that there was considerable downside hedging seen in the options market, with significant interest from large buyers for puts with strike prices between $75,000 and $80,000 for January, February, and March.

Current Bitcoin Value

At the time of reporting, Bitcoin was priced at approximately $94,344, which is nearly $14,000 off from its highest value recorded on December 17. Since Trump's election victory on November 5, the leading digital currency has appreciated by nearly 37%.

Future Outlook

Looking ahead, David Lawant, head of research at crypto prime broker FalconX, stated that despite the choppy price movements currently, a bullish trend into the first quarter of 2025 is still the most anticipated outcome. However, he cautioned that a low-liquidity environment could lead to increased volatility, particularly as December 27 is expected to witness a historic options expiry event in the cryptocurrency realm.

Traders are closely monitoring the activity of MicroStrategy Inc., a notable player in the Bitcoin space, to see if its acquisitions of Bitcoin will continue as the price reaches new thresholds.

Bitcoin, Market, Cryptocurrency