Bitcoin, the original cryptocurrency, is experiencing its first seven-day decline in eight weeks due to hawkish signals from the Federal Reserve. The asset has more than doubled in value this year and was trading at $97,400 in New York before dropping by as much as 5.3% to $92,149 on Friday.
The downturn is attributed to traders selling assets following a shift in sentiment after Donald Trump’s victory in the US presidential election. Cryptocurrencies had staged a rally following his win, but positioning became “overly bullish,” leaving digital assets vulnerable to a change in tone from the Fed, which is focusing on bringing inflation back down to target.
The heightened volatility comes as equities in the US traded higher and despite the recent record outflow of $680 million by US exchange-traded funds investing directly in Bitcoin. This marks a 15-day streak of continuous inflows that was snapped on Thursday.
Uncertainty in crypto markets is expected to continue over the holidays as Trump prepares to take office, leveling threats of tariffs against US allies and adversaries. Traditional financial firms are also being watched for their adoption of the asset class.
Analysts predict that Bitcoin will remain sensitive to macro and crypto-specific catalysts through 2025, according to Hani Abuagla, senior market analyst at XTB. Chris Weston, head of research at Pepperstone Group, advises caution in the short term due to a shift in momentum, but notes that this doesn’t mean a collapse is imminent.
Source: https://finance.yahoo.com/news/bitcoin-slumps-trump-euphoria-gives-114431051.html