Bitcoin’s meteoric rise paused after briefly surpassing the $108,000 mark for the first time, as investors weigh the upcoming Federal Reserve interest-rate decision and the wave of optimism surrounding President-elect Donald Trump’s pro-crypto stance. Following the high of $108,315 on Tuesday, the leading cryptocurrency retreated to around $104,800 by Wednesday afternoon, according to data from Singapore-based exchange platforms.
The broader cryptocurrency market, which saw its total value approach $4 trillion during the recent rally, has been buoyed by a combination of factors. Trump’s commitment to fostering favorable regulations for the U.S. crypto industry, including a potential national Bitcoin reserve, has sparked fresh optimism among investors. Additionally, the upcoming inclusion of MicroStrategy Inc. in the Nasdaq 100 Index—an event that could lead to further gains for a company primarily focused on Bitcoin investments—has added fuel to the bullish sentiment.
While Bitcoin’s upward trajectory remains impressive, the next move is uncertain as market participants await the Fed’s expected quarter-point rate cut. A reduction in interest rates is seen as a catalyst for continued risk-on sentiment, but there is less clarity about the Fed’s policy stance heading into 2025. Strong U.S. economic growth and the inflationary risks posed by Trump’s broader fiscal agenda add complexity to the outlook.
K33 Research analysts Vetle Lunde and David Zimmerman caution that while the FOMC’s meeting this week is likely to influence market volatility, the post-Fed period could see quieter macroeconomic conditions that may set the stage for Bitcoin to extend its gains into the holiday season.
Since Trump’s victory in the presidential election on November 5, Bitcoin has surged by more than 55%, attracting fresh inflows from investors, particularly into U.S. exchange-traded funds (ETFs) that track the cryptocurrency. However, despite the positive sentiment, concerns linger over Bitcoin’s volatility and its lack of traditional valuation metrics.
One indicator of investor optimism is the concentration of open interest on the Deribit options exchange, which shows the highest number of bullish bets at the $120,000 strike price. Open interest reflects the number of outstanding contracts and provides insights into investor positioning.
Nonetheless, market analysts, including Tony Sycamore from IG Australia, caution that the current price levels may warrant a more cautious approach. “While Bitcoin’s brief foray above $108,000 was impressive, its subsequent pullback to around $106,000 suggests potential volatility at these levels,” Sycamore said. Given Bitcoin’s history of sharp price corrections, investors are advised to assess risk carefully before making further moves.
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