Bitcoin has plunged over 7% amid the Federal Reserve’s third consecutive interest rate cut, marking its largest decline since September. The Fed’s decision to signal a slower pace of monetary easing has dampened the crypto market’s speculative momentum, with significant outflows impacting prices. Trading around $94,344, Bitcoin faces potential volatility due to a historically large options expiry event approaching at the end of the year.

Bitcoin, recognized as the leading digital currency, experienced a notable decline of over 7% during the week leading up to Monday morning in Singapore, representing its most significant drop since September. The Federal Reserve’s recent decision to implement a third consecutive interest rate cut, coupled with their indication of a more measured approach to monetary easing in the following year to manage inflation, has adversely affected global stock markets and dampened the speculative enthusiasm within the cryptocurrency sector. This shift away from a bullish sentiment in the market was influenced by President Trump’s previous endorsements of pro-cryptocurrency regulations and a potential national Bitcoin reserve. Moreover, the substantial outflow from U.S.-listed exchange-traded funds that invest in Bitcoin has prompted concerns about further price drops, according to Sean McNulty, director of trading at Arbelos Markets.

He remarked, “We should hold the $90,000 level for Bitcoin into the year end, but if we break below that could trigger further liquidations,” while highlighting the increase in downside hedging observed within the options market. Bitcoin was trading around $94,344, which is nearly $14,000 less than its peak reached in December. Despite this downturn, the cryptocurrency has surged approximately 37% since the presidential election held on November 5.

David Lawant, head of research at FalconX, views a period of volatile price movements leading up to the end of the year, particularly as December 27 is expected to showcase a historic options expiration in the crypto market. Additionally, there is heightened attention on MicroStrategy Inc., a major Bitcoin investor, to determine if they will persist with their acquisition of Bitcoin as traders monitor potential market triggers.

The cryptocurrency market, particularly Bitcoin, has been heavily influenced by external economic factors, particularly decisions made by the Federal Reserve. The central bank’s interest rate policy significantly impacts investment behaviors across various asset classes, including cryptocurrencies. The fluctuations in Bitcoin prices can often be correlated with broader economic signals, investor sentiment, and regulatory announcements. Given the current economic climate, traders are closely watching Bitcoin’s performance as well as the activities of entities like MicroStrategy, which have made substantial investments in the cryptocurrency.

In conclusion, the recent decline in Bitcoin’s value, exacerbated by the Federal Reserve’s interest rate cuts and significant outflows from Bitcoin-focused ETFs, highlights the fragility of the cryptocurrency market. As investors navigate these turbulent times, all eyes remain on critical price levels and institutional behaviors, particularly in the lead-up to significant options expirations that promise to add further complexity to price movements in the coming weeks.

Original Source: news.az

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