BITCOIN is headed towards its first weekly decline since Donald Trump’s victory in last month’s US election as a cautious Federal Reserve policy outlook tempers optimism sparked by the president-elect’s embrace of the crypto sector.
The largest digital asset was down more than 7 per cent for the seven-day period till 2.50 pm on Sunday (Dec 22) in New York, the biggest such drop since September. A wider crypto market gauge, encompassing smaller tokens such as Ether and meme-crowd favourite Dogecoin, suffered a sharper decline of about 10 per cent.
On Wednesday, the Fed delivered a third straight interest-rate cut while signalling a slower pace of monetary easing next year to keep inflation in check, sending global stocks into a tailspin. The hawkish pivot also damped the speculative spirits unleashed in the crypto market by Trump’s pledge of friendly regulations and his backing for a national Bitcoin stockpile.
The original cryptocurrency changed hands at about US$95,000, about US$13,000 below the record high set on Dec 17. The token is up more than 40 per cent since the presidential election on Nov 5.
Choppy price action near 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 may bring more volatility as we enter into the final days of the year, especially because on Dec 27 crypto is likely going to see the biggest options expiry event of its history”. BLOOMBERG
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