Bitcoin retreated from its record highs on Wednesday, as market optimism sparked by a potential Donald Trump presidency began to fade. The cryptocurrency’s price pullback followed the initial excitement around Trump’s election victory, with investors now shifting focus to upcoming U.S. inflation data for clearer guidance on future market trends.
The world’s largest cryptocurrency surged to nearly $90,000 earlier this week, driven by a week-long rally following Trump’s win. However, Bitcoin dropped 1.2% to $87,366.30 by 00:31 ET (05:31 GMT), as market sentiment turned cautious. The rally’s momentum appeared to wane as traders began to question the specifics of Trump’s proposed policies, particularly their impact on cryptocurrency regulation and the broader U.S. economy.
Trump, who has pledged to make the U.S. “the crypto capital of the world,” has raised hopes among crypto enthusiasts by suggesting the creation of a national Bitcoin reserve and a friendlier regulatory environment. These promises have led many to expect greater institutional credibility for Bitcoin as an investment. However, questions remain about the potential long-term effects of Trump’s fiscal policies, especially as his administration is expected to implement expansionary measures that could drive up inflation and interest rates.
With the U.S. Consumer Price Index (CPI) data set to be released later on Wednesday, market participants are bracing for news that inflation may have remained stubbornly high in October. This would likely dampen expectations for future interest rate cuts and could put additional pressure on Bitcoin and other risk assets.
Dogecoin Declines After Trump’s DOGE Announcement
Meanwhile, Dogecoin, the popular meme-based cryptocurrency, also saw a significant pullback on Wednesday, falling 8.3% to $0.355270 after a remarkable surge following Trump’s election win. Dogecoin had risen nearly 100% in recent sessions, fueled by excitement over Trump’s announcement that Elon Musk and Vivek Ramaswamy would head the newly proposed Department of Government Efficiency (DOGE).
Although the announcement initially sparked a rally, profit-taking by traders led to a sharp decline. Trump’s plan to establish the DOGE agency, which would operate outside of government structures to reduce bureaucracy and cut unnecessary regulations, has generated speculation about the future role of Dogecoin. However, it remains unclear whether the token will be formally integrated into government operations or remain a symbolic reference to the cryptocurrency.
Musk, a vocal proponent of Dogecoin, has been instrumental in driving interest in the token through his social media influence, but whether this will translate into lasting market gains is still uncertain.
Altcoins Follow Bitcoin’s Downward Trend
The broader cryptocurrency market also saw declines on Wednesday, as altcoins followed Bitcoin’s downward trajectory. Ethereum (ETH), the second-largest cryptocurrency by market capitalization, fell 5% to $3,163.50 after reaching a three-month high earlier in the week. Other notable altcoins, including Cardano (ADA), Solana (SOL), XRP, and Polygon (MATIC), experienced losses ranging from 4.7% to 11.5%, reflecting a broader pullback in market sentiment.
As investors await more clarity on Trump’s policies and the forthcoming inflation data, volatility in the cryptocurrency market is expected to continue in the short term.
Related Topics:
