Bitcoin Crashes After Trump’s Win! Is the Bull Run Over?”

Bitcoin, the largest cryptocurrency by market capitalization, has marked its first weekly decline since Donald Trump’s victory in the U.S. presidential election. The Federal Reserve’s hawkish policy shift, coupled with record ETF outflows, has dampened optimism in the crypto market. This comes as global markets reacted sharply to the Fed’s interest rate announcement, overshadowing Trump’s pro-crypto stance and his pledge for a national Bitcoin stockpile.

Fed’s Rate Cut and Market Reaction

On December 18, the Federal Reserve implemented its third consecutive interest rate cut for 2024, reducing the federal funds rate by 0.25 percentage points to a target range of 4.25% to 4.5%. This was accompanied by a clear message of slower monetary easing for the coming year, with only two rate cuts expected in 2025 compared to four initially forecasted.

The move was part of the Fed’s ongoing strategy to control inflation, which remains above its target range. However, it also sparked a major selloff in global equity markets. The Dow Jones Industrial Average plummeted by over 1,100 points on the same day, marking its largest single-day drop since 2008.

Source: New York Post

Impact on Bitcoin and the Crypto Market

Bitcoin, which had recently reached an all-time high of $108,500 on December 17, fell to $94,344 by December 23. This represents a weekly decline of over 7%, its sharpest drop since September 2024. Other cryptocurrencies, including Ethereum and Dogecoin, faced even greater losses, with a broader market decline of around 10%.

Experts suggest that the Fed’s cautious stance has curbed speculative enthusiasm, which was initially driven by Trump’s vocal support for Bitcoin and blockchain technology. His administration’s promise to create a favorable regulatory framework for cryptocurrencies had ignited a short-lived rally in the market.

Source: Business Insider

Bitcoin ETF Outflows Add Pressure

Institutional interest in Bitcoin appears to have waned, as evidenced by record outflows from U.S. Bitcoin exchange-traded funds (ETFs). According to recent data, over $458 million flowed out of Bitcoin ETFs last week alone, reflecting diminished confidence among large-scale investors.

Sean McNulty, director of trading at Arbelos Markets, commented, “We should hold the $90,000 level for Bitcoin into the year-end, but a break below this could trigger further liquidations.” He also noted increased activity in options markets, with significant hedging for January to March 2025 at strike prices between $75,000 and $80,000.

Source: BeInCrypto

Market Outlook for 2025

Despite current volatility, analysts remain cautiously optimistic about Bitcoin’s prospects in the coming year. David Lawant, head of research at crypto prime broker FalconX, predicts short-term price swings due to low liquidity and the year-end options expiry event on December 27. This will be the largest options expiry event in crypto history, involving billions of dollars in contracts.

Lawant added, “A bullish trajectory for Bitcoin remains the most likely scenario for the first quarter of 2025, provided market fundamentals stabilize and liquidity improves.” He also emphasized that institutional players like MicroStrategy could play a pivotal role in determining Bitcoin’s near-term direction.

Source: Barron’s

MicroStrategy’s Role in Bitcoin’s Future

All eyes are on MicroStrategy Inc., the enterprise software company turned major Bitcoin investor. Known for its aggressive Bitcoin acquisition strategy, MicroStrategy’s actions could significantly influence the market. Analysts are watching closely to see if the company continues its weekly Bitcoin purchases into the final weeks of 2024.

Source: CoinDesk