Bitcoin Posts First Weekly Decline Since Trump’s Election Win

By Investor Empires On Dec 23, 2024

(Bloomberg) — Bitcoin posted its first weekly decline since Donald Trump’s election victory, as a dovish outlook for Federal Reserve policy dampened optimism about the president-elect’s embrace of the cryptocurrency sector.

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The largest digital asset fell 9.5% during the seven-day period to 10 a.m. Monday in London. The broader cryptocurrency market gauge, which includes smaller tokens like Ether and meme-favorite Dogecoin, suffered a sharp decline of about 12%.

The Federal Reserve on Wednesday made a third straight interest rate cut while signaling a slowing pace of monetary easing next year to keep inflation under control, sending global stocks lower. The hard-line pivot has also dampened the speculative spirit unleashed in the cryptocurrency market by Trump’s pledge of friendly regulations and his support for a national Bitcoin stock. A record outflow from US exchange-traded funds investing directly in Bitcoin last week will weigh on prices in the near term, said Sean McNulty, director of trading at liquidity provider Arbelos Markets.

“We should hold the $90,000 level for Bitcoin until the end of the year, but if we break above that level it could lead to further liquidation,” McNulty said, adding that “significant negative hedging” was seen in the options market last week with major January buyers. February and March put between $75,000 to $80,000 in strikes.

The original cryptocurrency was trading at around $96,000, about $12,000 below the record high set on December 17. The token is still up nearly 40% since the presidential election on November 5.

Volatile near-term price action ahead of an “upward trajectory” in the first quarter of 2025 remains “the most likely scenario,” David Lawant, head of research at crypto brokerage FalconX, wrote in a note.

“The low liquidity environment may bring more volatility as we enter the final days of the year, especially since on December 27 cryptocurrencies are likely to witness the largest options expiration event in their history,” Lawant said.

All eyes are on whether MicroStrategy Inc, a former dot-com-era software maker, will continue its weekly buying of the largest U.S. cryptocurrency on Monday and hit the next price, traders said.

(Prices updates.)