The largest digital asset briefly fell below $87,000 on Friday after Federal Reserve Chairman Jerome Powell said there was no need to rush to cut interest rates. That put the token about $6,500 below its all-time high set on Wednesday.
In the derivatives space, K33 Research said the premium of bitcoin futures listed on the Chicago Mercantile Exchange over spot market prices has fallen. U.S. institutional investors use these contracts to take positions on the original cryptocurrency. Open interest, or open interest, for put options surged in 24 hours at an $80,000 strike price, according to Amberdata.
“The market seems to be cooling off,” said Vetle Lunde, head of research at K33, adding that the narrowing of futures premiums “could be a subtle hint of easing risk conditions.”
Trump's promise
Bitcoin has rallied about 30% since the Nov. 5 U.S. election in response to President-elect Donald Trump’s pro-crypto stance. The digital asset is now seen as one of a series of so-called Trump trades, with speculators wondering how much momentum is left in the rally.
Trump promised to establish a friendly regulatory framework for cryptocurrencies, build a strategic Bitcoin reserve, and make the United States a global center for the industry. Trump was once a cryptocurrency skeptic, but he changed his strategy after digital asset companies invested heavily in defending their interests during the campaign. Questions remain about the feasibility and implementation timeline of his promises.
Investors poured a net $4.3 billion into U.S. spot bitcoin exchange-traded funds after Election Day. The 12 funds, from issuers including BlackRock Inc. and Fidelity Investments, now have about $93 billion in combined assets, according to data compiled by Bloomberg.
Expected volatility
“This is all pure speculative trading right now,” said James Davies, CEO of Crypto Valley Exchange, an on-chain futures and options trading platform. “Expect a lot of volatility and a lack of clear signals for a while as we await U.S. policy announcements.”
Davies marked $90,000 as a key indicator to watch to see if it acts as “resistance, or if we’re way past it.” Data from Deribit shows that the most bullish Bitcoin options bets are on the $100,000 option.
As of 6 a.m. Friday in London, bitcoin was trading at $87,740. Smaller tokens such as second-ranked ether and meme crowd favorite dogecoin were mixed, in line with traders paring bets on a Fed rate cut following Powell’s comments.
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