(Bloomberg) — After a strong start to the new year that saw Bitcoin recapture the $100,000 level, the native digital asset fell to its lowest level this year on Thursday as it struggles to maintain momentum.
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Bitcoin fell as much as 2.8% to $91,785 on Thursday, a sharp decline from a high of $102,733 two days earlier and about 15% below the record high of $108,315 reached in mid-December.
Investors withdrew a net $583 million from U.S. Bitcoin exchange-traded funds on Wednesday, the second-highest outflows from the group since they debuted a year ago.
The success of these ETFs combined with newly elected President Donald Trump’s outspoken support for the digital asset industry has propelled Bitcoin to new heights in 2024, but the rally has stalled since the start of the year. US economic data released on Tuesday further dampened expectations for upcoming Federal Reserve rate cuts, putting pressure on risk assets.
Nick Forster, founder of crypto trading platform Derive.xyz, said downside protection in the form of put options is currently in high demand among traders, with the market expecting increased volatility, “possibly due to concerns about potential corrections.”
The Federal Reserve’s aggressive guidance is helping keep Bitcoin prices between $91,000 and $102,000, Peter Chung, head of research at Presto Research, wrote in a note to clients.
“A breakout will occur when the market completes its recalibration process and uncertainty disappears,” Chung wrote. “Signals of this will likely emerge after Trump’s inauguration on January 20 and gradually take shape during his first 100 days in office.”
Trading on the US stock markets is at a standstill on Thursday due to the funeral of former President Jimmy Carter. The lack of trading will likely reduce activity and liquidity.
(Updates with price movements and additional commentary.)
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