After reaching a record $108,000, Bitcoin sees its steepest weekly drop since September, driven by global and political factors.
The price of Bitcoin, the world’s most well-known cryptocurrency, has experienced a sharp decline in value this week, losing approximately $14,000 since December 17. On that date, the digital currency hit an all-time high of over $108,000 per unit. However, by 00:05 (GMT) on Monday, its value had dropped to just over $94,000, according to market data.
According to Bloomberg, this decline represents “the largest drop since September” and marks Bitcoin’s first weekly loss since Donald Trump won the presidential election in November. Trump’s victory had generated optimism in crypto markets due to his promises to implement crypto-friendly regulations and support the creation of a national Bitcoin reserve. However, this initial momentum appears to have faded in light of a combination of economic and political factors.
Economic and political factors
One of the main drivers of this drop has been the shift in monetary policy by the U.S. Federal Reserve (Fed). Last week, the Fed announced a 25-basis-point reduction in its key interest rate, bringing it to a range of 4.25% to 4.5%. This cut, the third consecutive one this year, was aimed at controlling inflation. However, the Fed also signaled a more cautious stance for future adjustments, generating uncertainty in global markets.
The impact of these measures was not limited to the cryptocurrency market. Globally, stock indices also recorded significant losses, and funds invested in Bitcoin experienced a record outflow from U.S. exchanges. This situation highlights the sensitivity of digital markets to changes in U.S. economic and monetary policies.
Outlook for Bitcoin
Sean McNulty, Chief Operating Officer at liquidity provider Arbelos Markets, commented that to avoid “further liquidations,” Bitcoin’s price should remain around $90,000 until the end of the year. This outlook suggests that market stability depends on a delicate balance between regulatory policies and market forces.
Despite current volatility, the crypto market remains an attractive option for many investors, albeit with higher short-term risks. Uncertainty surrounding the Fed’s monetary policy and the impact of promises made by the Trump administration will continue to influence the behavior of Bitcoin and other cryptocurrencies.
By Orlando J. Gutiérrez