Bitcoin Price Today: Dips After Reaching $108K as Profit-Taking Sets In and Fed Decision Looms

Bitcoin Slides Back After Record High as Profit-Taking Kicks In Ahead of Fed Decision

Bitcoin fell on Wednesday after a three-day winning streak and a record high, as profit-taking took place ahead of a key Federal Reserve interest rate decision. The cryptocurrency dropped 2.4%, to $103,688.0 by 01:13 ET (06:13 GMT), after briefly topping $108,000 just a day earlier.

The leading cryptocurrency hit an all-time high of $108,244 on Tuesday, fueled by the announcement that incoming President Donald Trump had raised the idea of a “Strategic Bitcoin Reserve” during an interview with CNBC last week.

Trump had previously promised to introduce crypto-friendly regulations if elected, and his recent appointments to key cabinet and regulatory roles indicated strong support for the crypto industry.

Still, after much excitement, analysts are doubtful regarding the possibility of such a reserve. Analysts have several issues with the practicality of the concept of a Bitcoin reserve in light of Trump’s long-held conviction about the superior status of the U.S. dollar.

Apart from the political events, recent statistics indicate that the whales, which are the large Bitcoin holders, have been highly influential in the price changes of the cryptocurrency.

On-chain analyst Ali Martinez reported that Bitcoin whales had bought 70,000 bitcoins by Tuesday alone. According to analysts, the increased demand from these whales is greater than the supply available, which is pushing up the prices of Bitcoin.

The fact remains that today, only 900 bitcoins are mined within 48 hours. In view of the demand from the whales, this is woefully short of supply.

With each passing day, the increasing demands from large holders heighten the concerns of an imminent supply crunch. Therefore, if the trend goes this way, analysts foresee that a major shortage in the Bitcoin supply may take place shortly, thereby influencing its price trajectory further.

Other Cryptocurrencies Catch on to the Trend

Other cryptocurrencies followed Bitcoin’s lead, with traders taking a cautious approach as the Federal Reserve meeting began. Investors also cashed out on altcoins, many of which had posted strong gains in recent sessions.

The second largest cryptocurrency, Ether, dipped by 4.7%, taking its recent drop to $3,839.41. XRP, the third largest cryptocurrency, slid 0.3% to $2.51. Solana edged down, while Polygon dipped 6.3%. In contrast, Cardano bucked the trend with an increase of more than 2%. Among meme tokens, Dogecoin fell by 0.8%.

Federal Reserve Decision and Its Impact on Crypto

Market participants have focused on the interest rate decision of the Federal Reserve. The central bank is widely expected to cut interest rates by 25 basis points on Wednesday.

However, much of the attention is on the Fed’s long-term outlook on rates, particularly amid persistent inflation and a resilient economy.

If the Fed signals that it is slowing down the rate cuts in 2025, then this would mean that interest rates may be high for a longer time, and this may be an issue for cryptocurrency prices.

Higher interest rates usually attract more attention to traditional assets such as bonds and savings accounts, which may draw investors away from riskier assets such as cryptocurrencies.

As the Federal Reserve meeting continues, the crypto market remains in a holding pattern, waiting to see how the central bank’s decisions will affect both short-term and long-term market sentiment.

Meanwhile, Bitcoin and other cryptocurrencies are fluctuating in the face of profit-taking and uncertainty over the Fed’s policies.

Recent rallies in Bitcoin to a record $108,244 have been triggered by political news such as the comment by Donald Trump on the possible reserve of Bitcoin and his pro-crypto stance.

Bitcoin has still dropped 2.4% amid the selling as traders take profits before the Federal Reserve’s interest rate decision.

The impact of whales buying huge quantities of Bitcoin, and the reduced supply of new coins, have led to the concern that there might be a supply crunch.

Meanwhile, other cryptocurrencies followed Bitcoin’s downward trend. Ether and XRP have been down. Focus is on the Fed’s interest rate decision and its long-term implications for the economy and cryptocurrencies.

If the Fed signals a slower pace of rate cuts in 2025, it could mean higher interest rates for longer, which may challenge the performance of cryptocurrencies moving forward.

As the market waits for further clarity, investors are cautiously monitoring these developments, with volatile price movements in Bitcoin and other digital assets in the interim.