Bitcoin Stumbles As Fed Policy Outlook Bumps On Crypto’s Trump Trade

On January 14, 2025By Littum

(Bloomberg) — Bitcoin and the broader cryptocurrency market have gotten off to a shaky start to the year, hurt by speculation that the Federal Reserve’s window for further interest rate cuts is closing.

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The digital asset briefly slipped below $90,000 on Monday — down nearly 5% compared to the start of 2025 — before a rebound that left it largely flat for January. Smaller tokens such as Ether are nursing losses for the month so far.

Investors are rallying around the prospect of a longer Fed interest rate break due to US economic resilience and the risk of inflationary tariffs and immigration policies from President Donald Trump, who is sworn in next week.

Treasury yields have risen as a result, cooling some of the enthusiasm for crypto sparked by Trump’s promise to make the US the global capital of digital assets by creating friendly regulations and undoing a Biden administration.

Traders also dumped stocks as a selloff in government bonds rippled across global markets. The S&P 500, for example, has erased much of the gains triggered by Trump’s Nov. 5 election victory.

‘Material pressure’

Higher bond yields and dollar strength have “put significant pressure on risk assets,” said Richard Galvin, co-founder of hedge fund DACM. At the same time, “Trump may make crypto-specific executive orders some of his first actions after inauguration,” he said.

Bitcoin, which hit an all-time high of $108,316 last month, changed hands at around $94,800 as of 1 p.m. 06.00 Tuesday in London. The token’s gains since Election Day have moderated to around 40%.

Many in the crypto community remain optimistic about a sustained boom under Trump. Bitcoin Accumulator MicroStrategy Inc. just reported its 10th consecutive weekly purchase of the cryptoasset, bringing its inventory to around $41 billion.

For now, the biggest digital asset remains in a “corrective phase,” according to Fairlead Strategies LLC technical analyst Katie Stockton. Chart trends point to the possibility of a test of “downside” support at $87,500, she said.

Over the past four trading days, investors have withdrawn about $1.6 billion net from U.S. spot Bitcoin exchange-traded funds, data compiled by Bloomberg show.