Bitcoin has recently experienced its first significant weekly price decline since former President Donald Trump’s electoral victory sparked a remarkable rally. The price of Bitcoin (BTC) has plummeted approximately 11% from its all-time high of $108,135 on December 17, closing the week at $94,645. This decline, amounting to a staggering $10,500 drop from the previous week’s opening price of $105,185, underscores the volatility that often characterizes the cryptocurrency market.
The recent downturn coincides with a significant shift in monetary policy. The Federal Reserve’s Federal Open Market Committee has reduced its projected interest rate cuts for the upcoming year, changing the outlook from five anticipated cuts to only two. This adjustment suggests that the federal funds rate could stabilize closer to 3.9% by 2025, a notable revision from an earlier expectation of 3.4%.
Such economic changes can lead to a less favorable atmosphere for risk-on assets like Bitcoin. In fact, until last week’s drop, Bitcoin had enjoyed a surge in price for six out of the last seven weeks following Trump’s victory, with only a minor retracement noted in late November. This sustained growth had investors optimistic about Bitcoin’s resilience and long-term potential.
Even amidst the pullback, industry analysts are maintaining a bullish outlook. Firms like Bitwise and VanEck anticipate Bitcoin could soar into the range of $180,000 to $200,000 by 2025. They believe this upswing could be bolstered by a strategic U.S. Bitcoin reserve and increasing institutional and corporate adoption.
The current administration’s pro-crypto stance, highlighted by appointments such as hedge fund manager Scott Bessent and Cantor Fitzgerald’s CEO Howard Lutnik to lead key economic departments, reinforces a potentially favorable regulatory environment for cryptocurrencies. Major changes within the Securities and Exchange Commission (SEC) are also anticipated with Paul Atkins replacing Gary Gensler soon after Trump’s inauguration, which could mitigate existing regulatory barriers for crypto adoption.
As of now, Bitcoin is trading at $96,073, about 11% below its record high, leaving many traders reflective. Last Christmas, Bitcoin was valued around $43,610 as speculation over the approval of spot Bitcoin exchange-traded funds (ETFs) surged. Moving forward, the cryptocurrency market remains a captivating space, reflecting broader economic behaviors and trends.
