Bitcoin (BTC) Takes a 12% Breather From Record Highs Following the US Fed's Rate Cut Announcement

Following Donald Trump's re-election in early November, Bitcoin experienced an unprecedented surge. Earlier last week, BTC made several new all-time highs (ATH) coming close to US$110k.

After Donald Trump's re-election in early November, BTC experienced an unprecedented surge. Earlier last week, BTC made several new all-time highs (ATH) coming close to US$110k. So, BTC’s recent 12% drop from the ATH might be just a breather.

The high of six days ago, the US Fed’s announcement of potentially only two rate cuts, along with Fed Chair Jerome Powell’s negative comments about a Bitcoin reserve, sent the largest crypto tumbling.

Is this just a momentary dip or is this really Bitcoin losing its “steam”, as Swissblock analysts wrote in a recent note to investors?

In a positive note, they wrote that despite taking a hit, they haven't heard a “bell”, signalling defeat.

Interestingly, profit-taking has been consistent and increased last week, though with less intensity than before, mainly due to long-term holders liquidating their positions. This trend leaves room for potential increased buying pressure from other market participants, the analysts added.

Guess who has also been taking some profits off the table? After 15 days without net outflows, the US Spot Bitcoin exchange-traded funds (ETFs) experienced two days of net negative flows.

Thursday and Friday last week saw a combined US$948.9 million (AU$1.51 billion) leave the ETFs. That's the first time since November 26 that these funds have had a net outflow.

Despite the hefty profit taking, the ETFs still hold a combined 1.139 million BTC or 5.425% of the total supply.

As the chart below shows, the ETFs have had a huge volume of inflows over the past two months, similarly to February and March, following the initial approval – just without the large outflows (of Grayscale's Bitcoin Trust).

The largest Spot Bitcoin ETF worldwide, BlackRock's iShares Bitcoin Trust (IBIT), holds a whopping 2.636%, which is currently 553,464 Bitcoin. The fund is one of the fastest growing ETFs in history, managing to gather almost twice the amount of money as BlackRock's gold-based ETF in less than a year.