Bitcoin Plummets 5% to $92,600 as Federal Reserve Signals Hawkish Stance
Bitcoin’s value fell by 5% to $92,600 after reaching a record high of over $108,000, influenced by hawkish US Federal Reserve signals. The decline affected other cryptocurrencies and prompted significant outflows from Bitcoin ETFs. Despite short-term volatility, Nigel Green of deVere Group projects that Bitcoin could reach $150,000 by mid-2025 due to increasing institutional interest and the asset’s appeal as an inflation hedge.
Bitcoin experienced a significant drop of 5% on Friday morning in New York, with its price plummeting to $92,600 from an all-time high of just above $108,000 earlier in the week. This decline reflects a nearly 15% fall from its peak, driven by hawkish signals from the US Federal Reserve, which have led traders to withdraw from the cryptocurrency amid fears of a tightening monetary policy. The downturn in Bitcoin also impacted smaller cryptocurrencies such as Ether and Dogecoin, while equities in Asian and European markets faced declines as well.
The withdrawal of capital from Bitcoin-related exchange-traded funds (ETFs) further highlights the heightened market volatility, revealing a record outflow of $680 million after a 15-day streak of inflows. Analysts attribute this volatility to overzealous bullish positioning in the crypto market in light of President Donald Trump’s expected policies post-election. The Fed’s recent focus on combating inflation has made investors wary, leading them to reassess their exposure to high-risk assets like cryptocurrencies as uncertainty looms over future monetary policies.
Looking ahead, Nigel Green, founder and CEO of deVere Group, predicts that Bitcoin may reach $150,000 by mid-2025, underlining his forecast with historical price movements. He emphasizes that Bitcoin’s outstanding year-to-date performance—up by 134%—and anticipated institutional investments will support further price appreciation. Green indicated that “Bitcoin is up an astonishing 134 percent year-to-date, and we believe the stage is set for even greater highs in the months ahead.”
Furthermore, the allure of Bitcoin is expected to be bolstered by its reputation as a safe-haven asset amid persistent inflation and geopolitical tensions. However, Green advised that investors should brace for inevitable market corrections as profit-taking may disrupt price movements in the short term. He concluded that the combination of Trump’s policies and growing institutional support creates a favorable environment for Bitcoin’s upward trajectory.
The cryptocurrency market has been characterized by significant volatility, often influenced by broader economic indicators and government monetary policies. Currently, the US Federal Reserve’s hawkish stance is impacting investor sentiment across various asset classes. Bitcoin, being a highly speculative asset, has witnessed substantial price fluctuations, especially following major political events, such as President Donald Trump’s victory in the recent election. The interplay of institutional interest, macroeconomic factors, and investor psychology is critical in shaping the trajectory of Bitcoin and cryptocurrencies as a whole.
In conclusion, Bitcoin’s recent price drop is a reaction to the US Federal Reserve’s signals about potential monetary tightening, leading to a significant sell-off among traders. While market volatility is expected to persist, analysts like Nigel Green maintain an optimistic long-term outlook, forecasting substantial price increases based on factors such as institutional investments and competitive asset performance in light of economic uncertainties. The ongoing dynamics in the cryptocurrency market continue to reflect a complex interplay of investor sentiment, regulatory developments, and economic indicators.
Original Source: www.livemint.com
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