Bitcoin Price Today Drops to $87k as Trump Euphoria Fades and Interest Rate Concerns Rise
Bitcoin Slides as Rate Worries Ease Some of Trump Optimism
Bitcoin BTC fell on Friday from near records, after two factors: cooling of initial optimism over Donald Trump’s election, and a generalised retrenchment from risk on concerns over US interest rates.
However, Bitcoin still managed to accumulate significant gains for the week. It even breached the $90,000 threshold earlier in the week. On its previous high for the week, the cryptocurrency had traded at $93,226.6 as it fell by 2.6% from the early hours of Friday at $87,634.6.
Anticipation of crypto-friendly regulations from Trump’s administration also helped push up earlier gains. Analysts and traders now closely watched for the Bitcoin trend to breach the key $100,000 level, potentially opening the market to further gains.
Bitcoin posted a strong weekly gain, with intermediate support
Bitcoin was marking a 14% weekly gain, the best since February and the third weekly gain in a row. Much of this rally was attributed to the prospect of supportive crypto policies from Trump’s administration that has bolstered institutional investment.
This optimism is partly supported by institutional inflows into crypto exchange-traded funds, greatly affecting the growth in the price of Bitcoin.
Campaign promises by Trump on having regulations that foster crypto and hint at the possibility of establishing a national Bitcoin reserve have been great interest points to investors, particularly the institutional ones.
However, the optimism was said to have slowly fizzled out in that the traders were waiting for more specific information on Trump’s proposed policies.
Trump’s Economic Policies and Implications for Bitcoin
Positive sentiment largely fueled Trump’s victory. A starter to the possible expectations led traders slowly tempering as more uncertainties of the president’s policies emerged.
The expectations about Trump’s economic policies concerning expansionary measures would activate inflation, thereby altering interest rates.
His prospective policies are deemed inflationary, which may restrict the Federal Reserve to take high-interest rates. Therefore, this environment will prove to be quite demanding on the risk assets, with Bitcoin being one of them.
The price of Bitcoin indeed appreciated in the early phases due to pro-crypto sentiments but was further pressured since these economic factors became more evident among traders.
Interest Rate Concerns Weigh on Bitcoin’s Rally
Renewed worries over U.S. interest rates further fueled excitement over Bitcoin’s latest peaks amid recent inflation data, released in October. The consumer and producer price increases looked good as they suggested that economic resilience remained strong and that the Fed may eventually have to act.
Following comments from Federal Reserve Chair Jerome Powell, saying the strength of the economy leaves the central bank more room before it has to decide whether to do additional rate cuts.
Markets had been anticipating a rate cut in December, and these comments by Powell tempered that expectation and shifted the sentiment and impacted the broader markets, including Bitcoin and other risk-driven assets.
These also imparted a decline on Wall Street with the dollar and Treasury yields surging, further placing pressure on cryptocurrencies.
Altcoins and Broader Crypto Market Performance
A number of altcoins followed closely behind Bitcoin as it moved lower. The second-largest cryptocurrency by market capitalization, Ether declined 5.4% to $3,050.79.
Even so, while most digital currencies were in the red, a few continued their runs in stellar weekly performances. Among them was Dogecoin, which surged to the best since October 2022 with an increase of 65% over the week.
This took place as more people on social media reacted to Trump’s announcement on the creation of the Department of Government Efficiency, DOGE. As per his statement, the same department would be headed by Elon Musk and Vivek Ramaswamy.
This news picked strong interests and speculations regarding Dogecoin, which could have had much to do with the surging price.
Major altcoins such as SOL, XRP, MATIC, and ADA had mixed performances on Friday and traded in a mostly flat-to-low range.
While there was some great fluctuations on some of these assets, most of them were indeed still in good standing based on earlier week gains, which shows that despite the wider market fluctuations, they are very resilient.
