Bitcoin (BTC-USD) extended a sharp decline, falling by over 10% on Friday after reaching a record high earlier this week. The cryptocurrency’s price plummeted to $95,885, down from an all-time peak of just above $108,000. This drop came amid shifting market sentiment, with investors reacting to a reduced outlook for looser US monetary policy.
On Thursday, a group of US exchange-traded funds (ETFs) that invest directly in Bitcoin recorded a massive outflow of $680 million, marking the end of a 15-day streak of continuous inflows. This marked a clear shift in investor behavior, highlighting concerns over Bitcoin’s short-term prospects.
Strahinja Savic, head of data and analytics at FRNT Financial, described such price corrections as “pretty typical” during bullish crypto markets. QCP Capital echoed similar sentiments, attributing the selloff to an “overly bullish” market positioning.
The market’s recent struggles followed the Federal Reserve’s hawkish stance on Wednesday, which dampened investor enthusiasm for risk assets, including Bitcoin. Despite the setback, Bitcoin has surged by nearly 50% since the November 5 victory of pro-crypto candidate Donald Trump in the US presidential election.
Edward Chin of Parataxis attributed the selloff to year-end profit-taking, stating, “There wasn’t anything fundamental that triggered the selloff.”
With a diminished expectation of rate cuts by the Federal Reserve in 2025, some investors have opted to reduce exposure and lock in profits.
Chris Weston, head of research at Pepperstone Group, advised caution, writing in a note, “Technically, caution is warranted in the short term. While a collapse in price is unlikely, momentum has clearly slowed, and buyers no longer dominate the market.”
As of 7:41 a.m. on Friday in London, Bitcoin traded at $97,878. Despite this recent pullback, it has more than doubled in value this year, driven in part by strong inflows into US Bitcoin ETFs.
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