The Bitcoin bull run that began after Donald Trump was declared the winner of the US election has slowed down in both spot and derivatives cryptocurrency markets.
Thursday's trading witnessed profit-taking after the significant rise, coinciding with statements by Federal Reserve Chairman Jerome Powell, who indicated the need to wait before making a decision to cut interest rates, especially with the continued strength of the US economy.
Bitcoin fell below $87,000 on Friday, about $6,500 away from Wednesday’s record high. However, it has pared those losses, now climbing back above $88,000.
Ethereum, the second-largest cryptocurrency, has seen a decline of more than 4% in the last 24 hours, falling below $3,100.
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derivatives performance
In the derivatives market, K33 Research revealed that the premium on Bitcoin futures contracts listed on the Chicago Board of Trade has fallen compared to the spot market price. Institutional investors in the United States use these contracts to build investment positions in the currency.
Amberdata data showed an increase in open options betting on the currency falling, at the $80,000 level.
Vitli Lunde, head of research at K33, said markets were starting to show signs of stabilization, noting that the narrowing gap between futures and spot prices could be a sign of lower risk.
Political movements and the Trump effect
Bitcoin has surged by about 30% since the US election on November 5, driven by President-elect Trump’s pro-crypto stance. Bitcoin is now part of what’s known as the “Trump trade,” as investors watch to see if the rally will continue.
Trump has promised to launch a regulatory framework that encourages cryptocurrencies, create a strategic reserve of Bitcoin, and transform the United States into a global hub for the industry. Despite his previous skepticism about digital assets, he changed his position after receiving support from crypto companies during his election campaign. However, the question remains about the realism of these promises and the timeframe for doing so.
Investors have poured about $4.7 billion into U.S. bitcoin exchange-traded funds since Election Day. The funds, run by companies including BlackRock Inc. and Fidelity Investments Inc., have total assets of about $94 billion, according to Bloomberg data.
Market forecast
James Davis, CEO of Crypto Valley Exchange, said that current trading is highly speculative, predicting a period of volatility and lack of clarity until new fiscal and monetary policies are announced in the United States.
He pointed out that the $90,000 level is a pivotal point to monitor the market direction, whether as a resistance level or as a starting point towards new levels. Data from the "Deribit" platform showed that there is a lot of interest in betting contracts that expect Bitcoin to reach the $100,000 level.
Alternative currencies
Outside of Bitcoin, other cryptocurrencies like Ethereum and Dogecoin were hit by a decline in risk appetite among investors on Friday, as traders scaled back bets on a Fed rate cut after Powell’s comments that emphasized caution in dealing with monetary policy.