(Bloomberg) — Bitcoin marked its first weekly decline since Donald Trump’s election victory, as the Federal Reserve’s cautious policy outlook dampened optimism about the president-elect’s embrace of the crypto sector.
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The largest digital asset fell 9.5% over the seven-day period to 10am on Monday in London. A broader crypto market gauge, which includes smaller tokens like Ether and the meme crowd’s favorite Dogecoin, saw a sharper decline of around 12%.
The Fed made a third straight rate cut on Wednesday, signaling a slower pace of monetary easing next year to keep inflation in check, sending global stocks into a tailspin. The hawkish pivot also dampened the speculative spirits unleashed on the crypto market by Trump’s promise of friendly regulation and his support for a national Bitcoin supply. Record outflows from U.S. exchange-traded funds that invested directly in Bitcoin last week will weigh on prices in the near term, said Sean McNulty, trading director at liquidity provider Arbelos Markets.
“We should hold the $90,000 level for Bitcoin until the end of the year, but breaking below that could lead to further liquidations,” said McNulty, adding that “meaningful downside hedging” was seen last week on the options market among major buyers for January. In February and March there are strikes of $75,000 to $80,000.
The original cryptocurrency changed hands for around $96,000, almost $12,000 below the record high set on December 17. The token is still up about 40% since the presidential election on November 5.
Choppy price action in the short term ahead of a “bullish trajectory” into the first quarter of 2025 is still the “most likely scenario,” David Lawant, head of research at crypto-prime broker FalconX, wrote in a note.
Lawant said a “low liquidity environment could bring more volatility as we enter the final days of the year, especially as crypto is likely to see the largest option expiration in its history on December 27.”
All eyes are on whether Bitcoin proxy MicroStrategy Inc., the former dot-com era software maker, will continue its weekly purchases of the largest U.S. cryptocurrency on Monday and hit the next price trigger, traders said.
(Updates prices.)
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