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23/12/24
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Bitcoin Faces First Major Dip Post-Trump Win Amid Shifting Fed Policies
Bitcoin has experienced a notable decline, marking its first significant weekly price drop since a rally ignited by Donald Trump’s election victory. For the week ending December 22, Bitcoin (BTC) fell by 10%, closing at $94,645 and losing approximately $10,500 from its previous value of $105,185.
This dip follows the Federal Reserve’s Federal Open Market Committee decision to reduce the anticipated number of interest rate cuts for the following year from five to two, following a sequence of three consecutive rate cuts. Projections now suggest the federal funds rate could stabilize near 3.9% by 2025, diverging from earlier expectations of 3.4%. Such an economic outlook generally poses challenges for riskier assets like Bitcoin, which tend to thrive in more favorable interest rate environments.
Prior to this downturn, Bitcoin had seen a bullish trend, recording price increases in six of the last seven weeks following Trump’s electoral win. The only exception was a minor retracement of about 0.78% during the week ending November 24, when Bitcoin was priced at $97,280.
Despite this setback, optimistic forecasts from asset management companies indicate that Bitcoin could rally to between $180,000 and $200,000 by 2025. This potential growth is thought to be driven by the establishment of a US Bitcoin reserve and increasing institutional and corporate adoption.
Furthermore, the upcoming Trump administration is anticipated to foster a more supportive regulatory environment for cryptocurrencies. Notable appointments, including pro-crypto figures such as Scott Bessent and Howard Lutnik as heads of the Treasury and Commerce departments, respectively, highlight this trend. Additionally, there is speculation that the new chair of the Securities and Exchange Commission, expected to be Paul Atkins, will advocate for a more favorable regulatory framework as he steps into the role on Trump’s inauguration day.
As of now, Bitcoin is trading at $96,073, which is approximately 11% below its all-time high of $108,135 reached on December 17. Comparatively, the cryptocurrency was valued at about $43,610 on Christmas Day of the previous year, with market sentiment focused on the potential approval of spot Bitcoin exchange-traded funds (ETFs).
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