As Bitcoin approaches the end of a record-setting year, its rally is gradually cooling, with investors reassessing the subsequent impacts of U.S. presidential candidate Trump’s support for the cryptocurrency sector, and market sentiment has noticeably cooled.
As of 11 AM Taipei time on Friday, the Bitcoin price is hovering around $95,800, down nearly 3% from the previous day. Other cryptocurrencies such as Ethereum and Dogecoin also performed weakly, with overall market momentum lacking.
Trump has boldly promised to create a cryptocurrency-friendly policy environment for the United States and supports the idea of establishing a 'national Bitcoin reserve.' However, traders remain cautious about the feasibility of this plan.
Meanwhile, the market is holding its breath in anticipation of the Bitcoin and Ethereum options contracts expiring today (27). According to analysis from cryptocurrency brokerage FalconX, this is one of the largest contract expiration events in cryptocurrency history, which could trigger significant market volatility.
Sean McNulty, trading head at liquidity provider Arbelos Markets, also warned that as these derivatives positions expire, the market may experience 'volatile conditions.'
Even though MicroStrategy signaled again this week that it might expand its Bitcoin purchases, Bitcoin's trend remains unremarkable. This company has transformed from a software firm into a 'big buyer' of Bitcoin, holding Bitcoin worth over $40 billion, making it a leader in the industry.
Data shows that if Bitcoin closes down in December, it will mark the first monthly decline in the past four months. Since reaching an all-time high of $108,316 on December 17, the Bitcoin price has dropped over 11%.
Despite light trading over the past two days amplifying price volatility, Bitcoin has doubled in value since the beginning of the year. However, one point that investors overlook is that the low interest rate environment, which originally supported cryptocurrency prices, may now become a significant obstacle.
The yield on the U.S. 10-year Treasury bond continued to climb to 4.63% on Thursday, approaching the high for 2024. Since the Fed announced a 50 basis point rate cut in September, yields have risen nearly 100 basis points.
Macroeconomic research expert Jim Bianco pointed out that the rapid rise in long-term rates after the Fed's rate cut is almost unprecedented in modern monetary history. He warned:
If the Fed continues to discuss rate cut expectations for 2025, the bond market will continue to sell off (leading to rising yields) until it triggers market pressure and suppresses inflation levels.
Bitcoin's correction at the end of the year may be a direct response from the market to the high interest rate environment, adding a sense of regret to a year that originally showed remarkable gains.
"Bitcoin's year-end rally has cooled, with large options contracts expiring! Analysis: A 'volatile market' may unfold." This article was first published on (BlockKe).
