Bitcoin’s price fell to $97,002, marking three straight days of decline due to macroeconomic pressures from the Federal Reserve’s hawkish outlook and profit-taking. After reaching a peak of $108,244.9, the cryptocurrency’s drop was accelerated by reduced expectations for interest rate cuts in 2025. El Salvador plans to continue Bitcoin purchases, even with IMF warnings before a significant loan agreement.

Bitcoin has experienced a decline for the third consecutive day, as macroeconomic pressures stemming from the Federal Reserve’s hawkish stance and recent profit-taking have led to a notable pullback. On Friday, Bitcoin decreased by 3.7%, trading at $97,002 as of 00:46 ET (05:46 GMT). The cryptocurrency fell below the $100,000 threshold following signals from Fed officials regarding a slower pace of interest rate cuts anticipated for 2025, impacting not only Bitcoin but also the broader cryptocurrency market, which witnessed sharp declines in value.

The world’s leading cryptocurrency reached an all-time high of $108,244.9 on Tuesday, after which the market saw a sell-off fueled by profit-taking and uncertainty in the macroeconomic environment. Following the Federal Reserve’s forecast of only two interest rate cuts in 2025, previously expected at four, the influence of tighter monetary policy on liquidity has reduced the attractiveness of speculative assets like cryptocurrencies. Furthermore, Fed Chair Jerome Powell indicated that the central bank would not participate in any initiatives to accumulate substantial amounts of Bitcoin, highlighting increasing skepticism regarding a proposed Strategic Bitcoin Reserve.

Despite these challenges, El Salvador’s government announced its intention to continue purchasing Bitcoin, with potential acceleration following a financing agreement with the International Monetary Fund (IMF). The country’s President Nayib Bukele agreed to limit Bitcoin’s role in the economy, exchanging this adjustment for a crucial $1.4 billion loan from the IMF, which had advised reducing exposure to cryptocurrencies amidst concerns over El Salvador’s limited access to global debt markets. Despite the obstacles, the country’s Bitcoin assets have seen a sharp increase in their valuation after the recent market rally.

In addition, the broader cryptocurrency market also faced significant losses today. Other major cryptocurrencies experienced even steeper declines than Bitcoin, as traders reacted to the Federal Reserve’s hawkish tilt. Notably, Ether fell by 7.5% to $3,337.39, having lost almost 15% across several days. Similarly, XRP dropped by 2.5% to $2.3009, while Solana and Polygon both experienced declines of 6.4% and 7% respectively, with Cardano declining over 8% to $0.8965. Meme tokens were not spared from the downturn either, with Dogecoin plunging 11.2% to $0.3199.

The article discusses the recent price movement of Bitcoin, which has seen a decline due to macroeconomic factors influenced by the Federal Reserve’s monetary policy. It highlights the impact of anticipated interest rate cuts on liquidity and how this affects speculative assets like cryptocurrencies. The context also includes news from El Salvador regarding its Bitcoin strategy in light of advice from the IMF, indicating the complexities faced by nations incorporating cryptocurrencies into their economies. Additionally, the performance of major cryptocurrencies in the market is presented to provide a broader view of market dynamics.

In summary, Bitcoin’s price decline reflects broader economic pressures and profit-taking following its record highs. The Federal Reserve’s indication of a slower rate-cutting approach has contributed to reduced liquidity, impacting the attractiveness of cryptocurrencies. While Bitcoin faces headwinds due to macroeconomic uncertainties and regulatory concerns, El Salvador’s commitment to Bitcoin purchasing amidst IMF advice illustrates the ongoing complexities and varying stances regarding cryptocurrency adoption.

Original Source: www.investing.com

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