Bitcoin records its first weekly decline since Trump’s election victory

(Bloomberg) — Bitcoin posted its first weekly decline since Donald Trump’s election victory, as the Federal Reserve’s cautious policy outlook dampened optimism about the president-elect’s embrace of the crypto sector.

Most read by Bloomberg

The largest digital asset lost 9.5% in the seven days to 10 a.m. Monday in London. A broader crypto market that includes smaller tokens like Ether and the meme crowd-popular Dogecoin suffered a steeper decline of about 12%.

The Fed made its third straight interest rate cut on Wednesday while signaling a slower pace of monetary easing next year to keep inflation under control, sending global stock markets into a tailspin. The hawkish policy shift also dampened speculative sentiment sparked in the crypto market by Trump’s promise of friendly regulations and his support for a national Bitcoin reserve. A record outflow from U.S. exchange-traded funds investing directly in Bitcoin last week will weigh on prices in the short term, said Sean McNulty, director of trading at liquidity provider Arbelos Markets.

“We should hold the $90,000 level for Bitcoin through the end of the year, but if we fall below there could be more liquidations,” McNulty said, adding that there were “significant downside hedges” in the options market last week have, with big buyers for January. Strikes of $75,000 to $80,000 occur in February and March.

The original cryptocurrency changed hands at around $96,000, almost $12,000 below the record high set on December 17th. The token is still up about 40% since the presidential election on November 5th.

Short-term choppy price action ahead of an “uptrend” in the first quarter of 2025 is still the “most likely scenario,” David Lawant, head of research at crypto prime broker FalconX, wrote in a note.

Lawant said that “a low liquidity environment could lead to more volatility entering the final days of the year, especially as cryptocurrencies are likely to experience the largest options expiration event in their history on December 27th.”

All eyes are on whether leveraged Bitcoin proxy MicroStrategy Inc., the former dot-com-era software maker, continues its weekly purchases of the largest U.S. cryptocurrency on Monday and hits the next price trigger, traders said.

(Updates prices.)

Most read by Bloomberg Businessweek

©2024 Bloomberg LP