Bitcoin, the world’s largest cryptocurrency by market cap, has recorded its first weekly decline since Donald Trump’s election victory. The drop, which amounts to over 7% for the week ending December 23, 2024, marks a significant pullback in a rally that had gained momentum following optimism around Trump’s pro-crypto policies.
Key Data
| Particulars | Details |
|---|---|
| Weekly Decline | 7% |
| Current Price | $94,344 |
| All-Time High | $108,000 (December 17, 2024) |
| Crypto Market Decline | 10% (Including Ether & Dogecoin) |
| Bitcoin Market Cap | ~$1.83 Trillion |
| Federal Reserve Rate Outlook | Slower rate cuts in 2025 |
| Historical Support Level | $90,000 |
| Options Market Activity | High hedging for $75,000-$80,000 |
Reasons Behind Bitcoin’s Decline
- Federal Reserve’s Hawkish Stance:
- The Federal Reserve announced its decision to slow down interest rate cuts in 2025, reducing expectations from four cuts to just two.
- Fed Chair Jerome Powell’s cautious outlook triggered a sell-off across riskier asset classes, including cryptocurrencies.
- Profit-Taking After All-Time High:
- Bitcoin reached its peak price of $108,000 on December 17, 2024, prompting profit-taking by investors.
- The sharp decline of over 12% from this high reflects a natural correction in an overheated market.
- Options Market Dynamics:
- Increased demand for protective options in the $75,000-$80,000 range signals market participants hedging against further downside.
- Broader Market Sell-Off:
- Other major cryptocurrencies, such as Ether and Dogecoin, suffered declines of 10% and 25%, respectively.
- This widespread sell-off indicates a loss of short-term investor confidence in the crypto market.
Market Expert Insights
Experts remain divided on Bitcoin’s trajectory:
- Sean McNulty, Director of Trading at Arbelos Markets:
“We should hold the $90,000 level into year-end, but a break below could trigger liquidations.”
- David Lawant, Head of Research at FalconX:
“Despite near-term volatility, Bitcoin is poised for a bullish trajectory in Q1 2025, driven by low liquidity and strong demand.”
- Robert Weissman, Co-President of Public Citizen:
“Deregulation might lead to short-term price surges but increases the risk of long-term market instability.”
Future Outlook
While Bitcoin’s price correction has spooked some investors, others see it as a healthy consolidation:
- Low Liquidity Volatility:
- Analysts expect heightened volatility as liquidity remains thin in the final trading days of 2024.
- Upcoming Options Expiry:
- December 27 will witness the largest crypto options expiry event in history, which could amplify price swings.
- Trump Administration’s Crypto Agenda:
- President-elect Trump’s pro-crypto stance, including pledges for a national Bitcoin stockpile, is seen as a potential catalyst for future rallies.
- Support Levels:
- Key support at $90,000 is being closely watched. A break below this level could lead to additional selling pressure.
FAQs
Why is Bitcoin experiencing a decline?
Bitcoin’s decline stems from profit-taking, the Federal Reserve’s cautious stance on rate cuts, and broader market sell-offs in risk assets.
What is the current price of Bitcoin?
Bitcoin is trading at approximately $94,344, down from its all-time high of $108,000.
Will Bitcoin recover in 2025?
Experts predict a bullish trajectory for Bitcoin in Q1 2025, driven by market demand and supportive policies under the Trump administration.
What role does the Federal Reserve play in Bitcoin’s price?
The Federal Reserve’s decisions on interest rates impact investor risk appetite. Slower rate cuts make cryptocurrencies less attractive compared to safer assets.
What is Bitcoin’s key support level?
Bitcoin’s key support level is $90,000. A break below this level could trigger further liquidations.
What is the largest options expiry event, and how will it affect Bitcoin?
The largest crypto options expiry on December 27, 2024, could lead to significant price volatility as traders settle contracts.
Is the Trump administration good for Bitcoin?
Trump’s pro-crypto policies, including regulatory support, are seen as favorable for Bitcoin’s long-term growth.
Conclusion
Bitcoin’s weekly decline highlights the volatile nature of cryptocurrency markets. While near-term challenges like profit-taking and macroeconomic uncertainties weigh on prices, long-term prospects remain optimistic. Investors should brace for volatility as the year concludes, with key events like the options expiry and Trump’s regulatory plans shaping the next phase of Bitcoin’s journey.
Disclaimer: This article is for informational purposes only and should not be considered financial advice. Always conduct thorough research before making investment decisions.
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