Bitcoin’s value dipped below $90,000 to start the week and is down over 10% in the past seven days after riding a postelection surge that pushed the digital token past the $100,000 mark thanks to President-elect Donald Trump’s campaign-touted support of the U.S. cryptocurrency market.
Bitcoin was trading at just over $92,000 per token around midday on Monday, according to tracking by CoinGecko.
Industry watchers say recent, positive economic data, including last week’s jobs report, and bond market activity is putting downward pressure on the risky crypto market even as expectations run high that the incoming Trump administration is set to be more friendly to the digital currency market.
The upbeat U.S. economic data is expected to push the Federal Reserve to embrace a pause, at least in the short term, on any additional interest rate cuts after ending 2024 with three straight reductions. Higher interest rates, along with a continued streak of high yields on U.S. Treasury bonds, are expected to blunt investor interest across the realm of speculative trading, including the crypto market.
“There are very real concerns over the Federal Reserve’s slower-than-anticipated interest rate cuts and this might be weighing on speculative assets like bitcoin — also this is being fueled by stronger-than-expected U.S. economic data, including robust job openings and purchasing managers index (PMI) figures,” James Toledano, chief operating officer at Unity Wallet, said in emailed comments included in a report from Forbes. “This heightens fears of lingering inflation which pushes rate expectations higher and therefore limits liquidity for risk-driven markets.”
Bitcoin’s postelection ride
Bitcoin’s value broke the $100,000 mark for the first time in early December and flirted with the $110,000 mark later in the month before pricing eased a bit. The digital token ended 2024 up over 100% for the year, with about half that gain realized after Trump’s election victory in early November.
While Trump is a past critic of cryptocurrencies and at one point warned that investments in the digital tokens were a “scam,” he has since pivoted to a crypto proponent and made repeated campaign pledges to create a friendly space for the sector. Among his pro-crypto comments was a promise made during a July keynote speech at a cryptocurrency conference in Nashville that, under his administration, “the rules will be written by people who love your industry, not hate your industry.”
Trump made good on that pledge last month, selecting Paul Atkins to head up the U.S. Securities and Exchange Commission. Atkins, who served as an SEC commissioner from 2002 to 2008, is widely known as a strong supporter of the cryptocurrency market.
Trump highlighted Atkins’ stance on digital currencies in an announcement of the selection, posted on Truth Social in December.
“Paul is a proven leader for common sense regulations,” Trump wrote. “He believes in the promise of robust, innovative capital markets that are responsive to the needs of Investors, & that provide capital to make our Economy the best in the World. He also recognizes that digital assets & other innovations are crucial to Making America Greater than Ever Before.”
Current SEC Chairman Gary Ginsler previously announced he would step down on Jan. 20, the day of Trump’s inauguration. Ginsler oversaw numerous enforcement actions focused on the crypto industry during his tenure.
The cryptocurrency market has exploded since bitcoin made its public debut in 2009 and the current portfolio of digital tokens numbers in the tens of thousands. Market volatility has been a benchmark of those virtual currencies as regulators in the U.S. and around the world have struggled to assemble a framework that suits the decentralized currencies.