Bitcoin is heading towards its first weekly decline as a cautious Federal Reserve policy outlook tempered optimism from Donald Trump’s victory in the US presidential election.
The digital asset was down by more than 7% through 2:50 pm (local time) on Sunday in New York. The crypto market gauge, compassing crypto assets like Ether and meme-crowd favourite Dogecoin, suffered a sharper decline in value of about 10%.
Bitcoin traded at about $95,000 on Sunday, a fall of about $13,000 since its record high on Dec 17. This also marks the biggest drop since September and breaks the steady rise, more than 40% value, since Trump’s election as the next US president.
“Choppy price action near term ahead of a ‘bullish trajectory’ into the first quarter of 2025 is still the “most likely scenario,” Bloomberg quoted, David Lawant, head of research at crypto prime broker FalconX, as saying.
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“Low-liquidity environment may bring more volatility as we enter into the final days of the year, especially because on December 27 crypto is likely going to see the biggest options expiry event of its history,” Lawant added.
The Fed’s announcement of a third straight interest rate cut on Wednesday, coupled with signals of slow-paced monetary easing next year, sent global stocks into a tailspin. The hawkish stance dampened high spirits in the crypto market, where traders bet on favourable regulations under Trump.
The Republican on Sunday announced the appointment of Bo Hines, who previously ran to represent a North Carolina district in Congress, as executive director of the Presidential Council of Advisers for Digital Assets, which incoming crypto czar David Sacks will chair.
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During his first term, Trump referred to cryptocurrencies as a “scam.” His move to cut corporate taxes during his first term brought more liquidity into the markets and drove more investments into high-growth assets such as cryptocurrency.
During the poll campaign, Trump projected himself as a “crypto-friendly” candidate and even pledged to make the US the “bitcoin and cryptocurrency capital of the world”. Trump also promised to ensure the US federal government does not liquidate its crypto assets.