Bitcoin falls off ATH: Will Fed impact on BTC?

Bitcoin falls to 104.5k from 108k.

The Polymarket BTC strategic reserve odds ease, BTC falls.

The Fed may decrease rates 25 bps.

A more hawkish Fed might hurt BTC soon.

Next for BTC?

Given the 14k surge in the last week, Bitcoin's 4% drop to 104.5k may be healthy. Coinglass reports that Bitcoin's market valuation is $2.06 trillion and its dominance over altcoins is 54%.

Altcoins have sold precipitously after Bitcoin's drop. Solana struggles at $216, Ethereum falls 3% to 3880, and XRP falls 4.5%. ADA, TRX, SHIB, TON, and XLM lost more. The crypto market capitalization plummeted $150 billion to little about $3.850 trillion today from nearly $4 trillion yesterday.

Bitcoin reached a record high of 108k on prospects of a Bitcoin Strategic Reserve and a crypto-friendly Washington under Trump. Recently, price behavior has tracked Polymarket chances of a US BTC reserve. BTC rose from 94k to 108k on Monday, raising the odds from 25% to 40%. Bitcoin's drop to 104k lowers the probability to 38%.

The aSOPR showed high profitability, which raised the possibility of a fall. Profitable holders sell when the measure reaches the first or second band, causing BTC to peak locally. Glassnode data revealed the measure around the first band at writing.

What will the Fed rate decision mean for Bitcoin?
The Federal Reserve interest rate announcement later today is attracting attention. The central bank may lower rates by 25 basis points. The second 25-basis-point rate decrease since the Fed began its rate lowering follows the September 50-basis-point cut.

Since the rate drop is priced in, the central bank's communication and predictions will matter. Given sticky inflation—CPI climbed to 2.7% YoY in November, up from 2.6%—and the US economy's resiliency, the Fed may suspend rate cuts in January and reduce them in 2025.

Lower interest rates enhance liquidity, which benefits risk assets like Bitcoin. A more hawkish Federal Reserve might affect Bitcoin prices in the short run.

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