(Bloomberg) — Bitcoin pared earlier losses after capping its first weekly decline since Donald Trump’s election victory, while many smaller tokens turned higher on the day.
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The largest digital asset was down 1.2% at about $93,962 at 4:39 p.m. in New York after dropping 2.8% earlier Monday. It has plunged about 13% from its last record on Dec. 17. A wider crypto market gauge, encompassing smaller tokens such as Ether and meme-crowd favorite Dogecoin, reversed losses to trade up more than 1%. Dogecoin itself rallied almost 4%.
The crypto market has been whipsawed between optimism over a friendlier regulatory environment under Trump’s incoming administration and concern that stubbornly high inflation will slow the pace of interest-rate cuts by the Federal Reserve. The recovery on Monday coincided with Republican Senate Majority Leader John Thune’s announcement of committee assignments for the next Congress, including the selection of Senator-elect Bernie Moreno, a crypto-friendly Ohio Republican, to the chamber’s Banking Committee.
Bitcoin is coming off its first weekly decline since Trump was elected, sliding 7.5% in the seven days through Sunday. The Fed on Wednesday delivered a third straight interest-rate cut while signaling a slower pace of monetary easing next year to keep inflation in check, sending global stocks into a tailspin. The hawkish pivot also damped the speculative spirits unleashed in the crypto market by Trump’s pledge of friendly regulations and his backing for a national Bitcoin stockpile. A record outflow from US exchange traded funds investing directly in Bitcoin last week will weigh on prices in the near term, said Sean McNulty, director of trading at liquidity provider Arbelos Markets.
“We should hold the $90,000 level for Bitcoin into the year end, but if we break below that could trigger further liquidations,” McNulty said, adding that “meaningful downside hedging” was seen in the options market last week with large buyers for January, February and March puts in $75,000 to $80,000 strikes.
Choppy price action in the near term ahead of a “bullish trajectory” into the first quarter of 2025 is still the “most likely scenario,” David Lawant, head of research at crypto prime broker FalconX, wrote in a note.
