Bitcoin Records First Weekly Decline Since Trump’s Election Amid Fed’s Hawkish Turn
The meteoric rise of the leading cryptocurrency appears to have hit a snag, marking its first weekly decline since Donald Trump’s November election victory. The market’s pullback comes as the Federal Reserve signals a more cautious outlook, tempering the optimism sparked by Trump’s crypto-friendly policies.
The digital asset experienced a 7% weekly decline, its sharpest since September, settling at $95,000 after hitting a record high of $108,000. This correction rippled across the broader cryptocurrency market, with altcoins like Ethereum and Dogecoin leading a 10% drop. The downturn follows the Federal Reserve's third consecutive interest rate cut and a cautious stance on future monetary easing, which tempered the optimism fueled by Trump’s pro-crypto policies and injected uncertainty into speculative markets.
This retreat has triggered a ripple effect throughout the digital asset ecosystem. Smaller tokens have faced sharper declines, highlighting their susceptibility to market volatility. The correction also underscores the growing integration of cryptocurrencies with traditional financial dynamics, where macroeconomic policies increasingly influence market trends.
David Lawant, head of research at FalconX, remains cautiously optimistic despite short-term market fluctuations, viewing the current dip as part of a broader "bullish trajectory" set to gain momentum in early 2025. He highlights the upcoming December 27 options expiry, expected to be the largest in crypto history, as a key factor likely to amplify market volatility, underscoring the increasing influence of derivatives on the sector.
Despite the current market correction, the overall sentiment surrounding Trump’s administration remains bullish. His commitment to fostering a crypto-friendly regulatory environment has been a significant driver of recent market surges. Investors are optimistic about the potential for more favorable legislation and increased institutional participation under his leadership.
The recent pullback underscores the inherent volatility of the cryptocurrency market, but its long-term prospects remain robust, bolstered by the introduction of ETFs and anticipated regulatory clarity. Analysts project a price floor of $50,000, even amidst short-term fluctuations. As the market navigates shifting monetary policies and year-end developments, the trajectory of digital assets into 2025 will be shaped by a dynamic interplay of macroeconomic trends and crypto-specific catalysts, offering valuable insights into the evolving landscape.