Introduction:
Bitcoin has encountered its first significant weekly price drop following a rally triggered by Donald Trump’s November presidential election win. This rally had raised the cryptocurrency to new heights, exceeding six figures.
Weekly Performance Overview
Bitcoin (BTC) dropped 10% during the week ending December 22, closing at $94,645. This marks a $10,500 decrease from its starting price of $105,185, according to TradingView data.
The decline follows the United States Federal Reserve’s Federal Open Market Committee announcement. The committee revised its projected interest rate cuts for next year from five to two, following its third consecutive rate cut. Projections now suggest the federal funds rate could plateau around 3.9% in 2025, rather than the previously expected 3.4%. This adjustment could create a less favorable economic environment for risk-on assets like Bitcoin.
Historical Price Trends
Before this dip, Bitcoin had enjoyed positive momentum, with its price rising in six of the last seven weekly closes since Trump’s victory. The only exception occurred in the week ending November 24, when Bitcoin experienced a modest decline of 0.78%, settling at $97,280, as per CoinMarketCap.
Despite the recent pullback, prominent asset management firms Bitwise and VanEck remain optimistic. They predict Bitcoin could reach between $180,000 and $200,000 by 2025, driven by factors such as a potential U.S. Bitcoin reserve and increased institutional and corporate adoption.
Pro-Crypto Moves by the Trump Administration
The Trump administration has showcased a strong pro-crypto stance, nominating industry-friendly leaders for key positions:
- Scott Bessent, a hedge fund manager, has been tapped for Secretary of Treasury.
- Howard Lutnik, CEO of Cantor Fitzgerald, is set to lead the Commerce Department.
In addition, Paul Atkins, a well-known crypto advocate and former SEC commissioner (2002-2008), will replace Gary Gensler as Chair of the Securities and Exchange Commission (SEC). Atkins is expected to usher in a friendlier regulatory environment for cryptocurrencies. His tenure begins on January 20, coinciding with Trump’s inauguration.
Bitcoin’s Current Price and Market Sentiment
Bitcoin was trading at $96,073 as of the latest data, marking an 11% drop from its all-time high of $108,135 recorded on December 17. However, the cryptocurrency has come a long way since Christmas Day last year, when it traded at $43,610. Speculation around the approval of spot Bitcoin exchange-traded funds (ETFs) has fueled much of its upward momentum in recent months.
Outlook for Bitcoin
While the current market conditions may seem challenging, the long-term outlook for Bitcoin remains positive. Institutional interest, regulatory changes, and macroeconomic factors could shape its trajectory in the years ahead. Many experts believe the cryptocurrency’s best days are still to come.
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