A BOUT of selling buffeted crypto as the optimism sparked by president-elect Donald Trump’s embrace of the sector begins to cool.
Bitcoin fell below US$95,000 at one point on Tuesday (Dec 10), while an index of smaller digital assets slid as much as 15 per cent, one of its biggest intraday drops of 2024.
Speculators ploughed into crypto after the US election on Nov 5, spurred by Trump’s pledge to create a supportive regulatory backdrop and his controversial backing for a national Bitcoin reserve. At the same time, the hair-trigger volatility of digital assets leaves investors prone to exiting bets quickly.
Bitcoin hit a record US$103,800 on Dec 5 but subsequently struggled to stay above the six-figure level. The overall crypto market has shed about US$150 billion in the past 24 hours, based on figures from tracker CoinGecko.
Recent trading points to “deleveraging across the crypto ecosystem”, said Sean Farrell, head of digital-asset strategy at Fundstrat Global Advisors. One trigger may be caution ahead of US inflation data on Wednesday that may colour expectations for Federal Reserve interest-rate cuts, according to Farrell.
Trump’s agenda
Trump has picked a digital-asset supporter to be the next head of the US securities regulator and named the first-ever White House czar for artificial intelligence and crypto. He used to be a crypto sceptic but pivoted as the industry spent big on promoting its interests during election campaigning.
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For fans of digital assets, a boom lies ahead as Trump rips up a crackdown imposed by the Biden administration. Critics say wider mainstream crypto acceptance brings a panoply of risks.
About US$10 billion has poured into US spot-Bitcoin exchange-traded funds since Trump became president-elect. Meanwhile, Bitcoin accumulator MicroStrategy bought another US$2.1 billion of the token.
Traders may view MicroStrategy’s announcements of historical purchases as “implicitly pulling a pretty significant spot bid from the market”, Farrell said.
Bitcoin changed hands at US$97,990 as at 9.47 am on Tuesday in Singapore. Smaller tokens such as Ether and meme-crowd favourite Dogecoin were mixed.
Fairlead Strategies technical analyst Katie Stockton in a note recommended a “neutral short-term bias” after Bitcoin’s failure to remain above US$100,000. BLOOMBERG
