Since President Donald Trump’s election in November, Bitcoin has experienced a significant rally, propelling its value well into six figures. However, the week ending December 22 marked Bitcoin’s first considerable weekly price drop during this period.
Bitcoin fell by 10% during the week, closing at $94,645. This decline erased approximately $10,500 from its starting point of $105,185 at the beginning of the week, according to data from TradingView. The downturn coincided with a shift in U.S. monetary policy when the Federal Reserve’s Federal Open Market Committee reduced the forecast number of interest rate cuts for the next year from five to two, following its third consecutive cut.
The reduction in anticipated rate cuts is significant because it suggests a potential rise in the federal funds rate to around 3.9% by 2025, higher than the previously expected 3.4%. This adjustment signals a potentially less favorable economic climate for risk-on assets like Bitcoin, which tend to perform well in low-interest rate environments.
Despite the recent pullback, Bitcoin’s price had increased in six of the seven weeks following Trump’s election victory. This surge reflects ongoing optimism surrounding the cryptocurrency, fueled by several factors including political developments and broader economic trends.
Projections and Predictions for Bitcoin
Looking forward, major asset management firms such as Bitwise and VanEck have projected that Bitcoin’s price could reach between $180,000 to $200,000 by 2025. These forecasts are partly based on the potential establishment of a strategic U.S. Bitcoin reserve and anticipated increases in institutional and corporate adoption of the cryptocurrency.
Under Trump’s upcoming administration, the U.S. is poised to adopt a more cryptocurrency-friendly regulatory environment. Trump has appointed notable pro-crypto figures, including hedge fund manager Scott Bessent as Secretary of Treasury and Cantor Fitzgerald CEO Howard Lutnik to head the Commerce Department. Furthermore, crypto advocate Paul Atkins is expected to replace Gary Gensler as the chair of the Securities and Exchange Commission, aligning with Trump’s inauguration on January 20.
As of the latest data, Bitcoin is trading at $96,073, down about 11% from its all-time high of $108,135 recorded on December 17. This current value represents a significant increase from last Christmas, when Bitcoin was trading around $43,610 amidst speculation over the approval of spot Bitcoin exchange-traded funds (ETFs).
What The Author Thinks
Despite the recent dip in Bitcoin’s price, the long-term outlook remains overwhelmingly positive. The combination of a pro-crypto federal administration, the potential establishment of a Bitcoin reserve, and increasing mainstream adoption could continue to drive Bitcoin’s price upwards. As we move forward, the integration of Bitcoin into more formal financial structures and its acceptance by major institutions might not only stabilize its price fluctuations but could also cement its status as a foundational asset in the modern financial landscape.
Featured image credit: VectorPortal
Follow us for more breaking news on DMR