The Financial Association reported on December 23 (Editor: Zhou Ziyi) that Bitcoin experienced its first weekly decline since Donald Trump's election as President of the United States, due to the Federal Reserve's hawkish policy outlook which weakened the optimism brought to the cryptocurrency industry by the elected president.
As of the time of publication, Bitcoin was priced at $95,199.3, having briefly fallen below $94,000 during the day. Over the past week, it has accumulated a decline of more than 7%, marking the largest weekly drop since September of last year. Additionally, this downtrend has spread to the broader cryptocurrency market, including smaller tokens such as Ether and Dogecoin, which have seen even larger declines of about 10%.
"A large number of short options are set to expire"
Last Wednesday, the Federal Reserve cut interest rates for the third consecutive time while hinting that it would slow down monetary easing next year to control inflation, leading to volatility in global stock markets. The Federal Reserve's hawkish shift also suppressed the speculative sentiment released by Trump in the crypto market, as he had promised a friendly regulatory approach to cryptocurrencies and expressed his support for a national Bitcoin reserve.
Sean McNulty, trading director at liquidity provider Arbelos Markets, stated that there was a record outflow of funds from U.S. exchange-traded funds (ETFs) directly investing in Bitcoin last week, which will put pressure on Bitcoin prices in the short term.
McNulty added, "By the end of the year, Bitcoin should be able to hold the $90,000 level, but if it falls below that level, it may trigger further liquidations."
He also pointed out that the options market saw "meaningful hedging" last week, with large Bitcoin buyers in January, February, and March buying put options in the range of $75,000 to $80,000.
David Lawant, head of research at cryptocurrency brokerage FalconX, wrote in a report that recent price volatility remains "the most likely scenario" before entering a "bullish trajectory" in the first quarter of 2025.
Lawant stated, "As we enter the last few days of this year, a low liquidity environment may bring more volatility, especially since there may be the largest options expiration event in cryptocurrency history on December 27."
Additionally, traders noted that everyone is watching whether Bitcoin "whale" MicroStrategy will continue its weekly Bitcoin purchases on Monday and reach the next price trigger point.