Bitcoin’s remarkable rally is tapering off in the final days of what has been a record-breaking year for the cryptocurrency. As of 6 a.m. Friday in London, Bitcoin was trading at $96,200, partially recovering from a near 3% decline on Thursday. Other cryptocurrencies, including Ether and Dogecoin, are trading within narrow ranges as investors reassess market drivers.
Trump’s Crypto-Friendly Push
The slowdown comes as President-elect Donald Trump continues to champion a pro-crypto agenda, pledging to create a crypto-friendly environment in the U.S. and proposing the establishment of a national Bitcoin reserve. While Trump’s stance has fueled optimism in the sector, traders are now locking in profits and weighing the feasibility of the proposed reserve.
Options Market Volatility
The crypto market is also navigating the expiration of a significant volume of Bitcoin and Ether options contracts on Friday, which analysts predict will be one of the largest expiry events in digital asset history.
The notional value of Bitcoin contracts on Deribit, a major derivatives exchange, exceeds $14 billion. Ether options contracts expiring are worth approximately $3.8 billion. Such expirations often lead to heightened volatility as traders reposition their portfolios.
MicroStrategy’s Expansion Plans
Despite the recent pullback, corporate interest in Bitcoin remains strong. MicroStrategy Inc., a company that has transitioned from software development to becoming a major Bitcoin holder, signaled plans to expand its $40 billion Bitcoin holdings.
The firm has become a poster child for corporate adoption of digital assets, but its potential expansion has so far failed to counterbalance the profit-taking and cautious sentiment dominating the market.
December Decline Looms
After hitting an all-time high of $108,316 on December 17, Bitcoin is on track for its first monthly decline in four months, according to Bloomberg data. Investors withdrew a net $1.5 billion from U.S. spot-Bitcoin exchange-traded funds in the four trading days through December 24 — the heaviest outflow since Trump’s election victory on November 5.
As 2024 draws to a close, the crypto market’s focus shifts to the implications of Trump’s policies, potential corporate adoption, and the broader regulatory landscape. Whether Bitcoin can reignite its momentum or face more headwinds remains to be seen as investors navigate the evolving dynamics of the cryptocurrency sector.
