Bitcoin (BTC) has recorded its first weekly decline since Donald Trump was elected president, adding uncertainty to the market.
Bloomberg reported on Monday that Bitcoin has fallen over 7% in the past week and is trading around $94,000. This represents a drop of about $14,000 from its peak of $108,135 on December 17th, suggesting that the recent bull run has entered a correction phase.
Bloomberg attributes this downturn primarily to changes in the U.S. Federal Reserve’s monetary policy. The Fed’s message to slow the pace of monetary easing to combat inflation has reportedly dampened investor sentiment.
In particular, the Fed’s hawkish stance has dampened speculative sentiment in the crypto market and tempered expectations surrounding President-elect Trump’s crypto-friendly policies and proposals for national Bitcoin reserves.
Sean McNulty, trading director at Arbelos Markets, stressed the critical importance of Bitcoin holding the $90,000 level through year-end.
McNulty cautioned that a collapse below this level could create additional selling pressure, potentially leading to steeper price declines. Investors are hedging against further downsides as increased demand for put options (rights to sell at a predetermined price) with strike prices between $75,000 and $80,000.
However, David Lawant, head of research at FalconX, offered a more optimistic outlook. While acknowledging that low year-end liquidity could increase Bitcoin’s volatility, Lawant maintains a strong possibility of a bullish reversal in the first quarter of 2025. He highlighted the upcoming options expiry event on December 27th – the largest in crypto history – as a potential market-moving catalyst.
Most Commented