Bitcoin Slide Extends to More Than 10% as Reduced Scope for Looser US Monetary Policy Crimps Speculative Zeal

(Bloomberg) -- A Bitcoin slide from a record high earlier this week extended to more than 10% at one point, as reduced scope for looser US monetary policy crimped speculative zeal.

Bitcoin erased some of this week’s gains, dropping as much as 10% amid speculation that the Federal Reserve’s reduced appetite for looser monetary policy may be curbing some speculative enthusiasm.

The world’s largest cryptocurrency slid to as low as $95,564 on Thursday, according to pricing from Coinbase. The selloff followed a record high just two days earlier, when Bitcoin briefly topped $108,000. The downturn was steeper for smaller tokens such as Ether and Dogecoin.

Such corrections are “pretty typical” in crypto bull markets, said Strahinja Savic, head of data and analytics at FRNT Financial.

Bitcoin’s selloff mirrored a broader sell-off in most risk assets after the Federal Reserve pivoted to a more hawkish stance on Wednesday. The central bank signaled it will begin raising interest rates in 2023 and now expects to cut them only once by the end of 2025.

Still, Bitcoin is up almost 50% since pro-crypto Donald Trump’s victory in the US presidential election on Nov. 5.

“It looks like some year-end profit taking,” said Edward Chin, amodities strategist at Parataxis. “There wasn’t anything fundamental that triggered the selloff.”

With fewer Fed rate cuts now expected for 2025, some investors may be choosing to reduce their exposure and take profits.

“Technically, caution is warranted in the short term,” Chris Weston, head of research at Pepperstone Group, wrote in a note. “This doesn’t mean we’re due to see a collapse in price anytime soon, but the momentum has clearly come out of the move and the buyers have lost dominance and control of the tape.”

Bitcoin was trading at $97,836 as of 7:10 a.m. on Friday in Singapore. It has more than doubled this year, helped by a flood of inflows into US exchange-traded funds for the token.