After a record-breaking run for most of 2024, Bitcoin faced its first major setback in months, falling 3.2% in December. The drop came as US investors decided to cash in on gains following a rally fueled by President-elect Donald Trump’s victory, which had propelled Bitcoin to an all-time high of $108,315 in mid-December.
Crypto market energy began to fade as hopes for aggressive interest rate cuts by the Federal Reserve cooled, making riskier assets like cryptocurrencies less attractive. Data showed that US Bitcoin exchange-traded funds (ETFs) experienced a net outflow of $1.8 billion since December 19. At the same time, open interest in Bitcoin futures (a popular measure of institutional interest) fell nearly 20% from its peak earlier in the month, according to Chicago-based CME Group.
Still, 2024 was a banner year for Bitcoin, surging 120% and outperforming traditional investment options like gold and global stock markets. Its stellar performance highlighted the growing acceptance of cryptocurrencies among institutional investors, including university endowments, which began adding Bitcoin to their portfolios this year.
Many market observers believe that the new year could bring new opportunities for Bitcoin. January is expected to be crucial as institutions reconsider their investment strategies. “Cryptocurrency-friendly regulations planned under the incoming Trump administration have generated optimism,” QCP Capital said in an update to clients. “With Bitcoin now widely recognized in a variety of institutional portfolios, we anticipate an increase in allocations. This could solidify Bitcoin’s market dominance, smooth out price swings and bring its behavior closer to that of traditional stocks.”
Mid-week, Bitcoin was trading at $93,518 at 2:55 pm in Singapore, down a slight 0.20%. Other cryptocurrencies, including Ether and Dogecoin, also struggled to advance, reflecting a broader market slowdown.
Despite the December pullback, experts remain optimistic about Bitcoin’s long-term prospects. They point to its resilience and growing adoption as evidence of its staying power, but caution that macroeconomic changes (such as Federal Reserve policies and global economic trends) could still determine the direction of the market in the coming months.
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