Bitcoin has recently experienced significant price volatility. This decline follows a record high of $108,262 earlier this week.

Several factors have contributed to this fluctuation:

Federal Reserve's Monetary Policy: The Federal Reserve signaled a slowdown in interest rate cuts for 2025, influencing investor sentiment and impacting both equity and cryptocurrency markets.

Speculation on U.S. Bitcoin Reserve: President-elect Donald Trump's proposal to establish a national Bitcoin reserve has generated both enthusiasm and skepticism. While some politicians support the idea, Federal Reserve Chairman Jerome Powell stated that the institution cannot legally hold Bitcoin, dampening some of the optimism.

Additionally, the recent rise in 10-year Treasury yields has created a challenging environment for risk assets, including Bitcoin. Analysts note that Bitcoin's price often moves inversely to long-term Treasury yields, with higher yields leading to decreased demand for non-yielding assets like cryptocurrencies.

Despite the current downturn, Bitcoin has had a strong year, with its price surpassing $100,000 for the first time earlier this month. The approval of Bitcoin exchange-traded funds (ETFs) by the U.S. Securities and Exchange Commission has further legitimized the cryptocurrency, attracting more institutional investors.

Investors should remain aware of the inherent volatility in the cryptocurrency market and consider these developments when making investment decisions.