Bitcoin experienced a sharp decline on Friday, retreating from its near-record highs earlier in the week as optimism surrounding a potential Donald Trump presidency faded. The dip was also fueled by growing uncertainty over U.S. interest rates, which dampened broader risk sentiment.
The world’s largest cryptocurrency, which had surged to an all-time high above $93,000 earlier this week, fell 2.6% to $87,634.60 as of 00:26 ET (05:26 GMT). Despite the pullback, Bitcoin remained on track for its best weekly performance since February, with a 14% increase, marking its third consecutive week of gains.
Bitcoin’s recent surge had been largely driven by speculation that a Trump presidency could lead to more favorable regulatory conditions for cryptocurrencies. Trump’s victory in the 2024 election reignited hopes of institutional support for crypto, particularly through exchange-traded funds. Additionally, Trump’s promise to introduce crypto-friendly policies, including the potential creation of a national Bitcoin reserve, had sparked investor enthusiasm.
However, optimism surrounding Trump began to wane on Friday as traders awaited more clarity on his specific policy agenda. Adding to the uncertainty, there were concerns that Trump’s expansionary economic policies could lead to higher inflation, which might keep U.S. interest rates elevated for an extended period.
These worries were compounded by a series of stronger-than-expected inflation reports for October, which triggered fears that the Federal Reserve may delay interest rate cuts. Fed Chair Jerome Powell’s comments underscoring the resilience of the U.S. economy added to market jitters, prompting traders to scale back expectations for a rate cut in December. As a result, broader risk assets, including stocks, experienced a pullback, while the U.S. dollar and Treasury yields surged.
In the broader cryptocurrency market, Bitcoin’s retreat was mirrored by a decline in other major coins, although many were still poised for solid weekly gains. Ether, the second-largest cryptocurrency, dropped 5.4% to $3,050.79. However, Dogecoin stood out with a remarkable 65% surge, marking its best week since October 2022. The rally was sparked by social media buzz surrounding Trump’s announcement of the formation of the Department of Government Efficiency (DOGE), which will be led by Elon Musk and Vivek Ramaswamy.
Other altcoins, including Solana (SOL), XRP, MATIC, and Cardano (ADA), showed limited movement on Friday but were still on track for strong weekly gains.
As markets await further developments on U.S. economic policy and interest rates, the future trajectory of Bitcoin and the broader crypto market remains uncertain, with traders closely monitoring the evolving political and economic landscape.
Related Topics:
