Bitcoin has experienced a significant drop, declining 10% over the week to $94,645 by December 22. This slump marks the first notable weekly decrease for Bitcoin since the election of Donald Trump, contrasting sharply with its recent bullish trend that saw it swell past $100,000.
The price correction removed about $10,500 from Bitcoin’s value, which began the week at $105,185. This downturn was triggered by the Federal Reserve’s latest announcement, reducing estimated 2024 interest rate cuts from five to two, following its third consecutive rate cut. Such monetary policy adjustments create a less favorable environment for risk-oriented assets, including Bitcoin and other cryptocurrencies.
Prior to this dip, Bitcoin had shown remarkable resilience, rising in six of seven weeks post-Trump’s election victory. The only earlier decline in this period was a minor 0.78% drop that took Bitcoin to $97,280 during the week ending November 24.
From a technical standpoint, analysts are observing potential further declines, identifying support levels around $92,000. Technical indicators reveal consistent selling pressure, with the Moving Average Convergence Divergence (MACD) showing signs of weakness. Furthermore, the On-Balance Volume (OBV) continues to trend downward, suggesting that traders are wary.
Market watchers are particularly focused on the pivotal $92,100 level. A bounce back from this price could preserve the overall bullish structure, while a breakdown might indicate deeper declines toward the $88,900-$89,700 support area.
Despite this price weakness, major asset management firms—such as Bitwise and VanEck—remain bullish about Bitcoin’s future, projecting values between $180,000 and $200,000 by 2025. They cite potential catalysts for growth, like a proposed U.S. Bitcoin reserve strategy and growing institutional adoption.
The political landscape is likely to shape Bitcoin’s trajectory too. Trump’s administration is expected to appoint several crypto-friendly individuals, including Scott Bessent, a hedge fund manager, as Treasury Secretary, and Howard Lutnik, the CEO of Cantor Fitzgerald, for Commerce Secretary.
There is a collective sense of anticipation regarding regulatory changes that may come with the new SEC leadership. Paul Atkins, who is set to replace Gary Gensler on January 20, has a pro-crypto reputation, which could ease some concerns in the cryptocurrency community.
Reflecting on Bitcoin’s path throughout 2024, it has impressively surged from about $43,610 on Christmas Day 2023, doubling its value, even with the recent corrections. Yet, daily trading volumes reveal signs of weakness too, with activity dropping 4.18% below $50 billion. The market also faced $40 million in liquidations for long positions over a single day, underscoring the challenges leveraged traders are facing.
Currently, Bitcoin stands around $96,073, marking an 11% decline from its all-time high. This recent activity merits attention from retail and institutional investors alike, especially following the earlier approval and launch of spot Bitcoin ETFs, which represented a significant milestone for mainstream acceptance.
In these uncertain times, investors remain vigilant, trying to gauge whether Bitcoin will consolidate before reattempting its recent highs.
