(Bloomberg) — Bitcoin pared earlier losses after capping its first weekly decline since Donald Trump's election victory, while many smaller tokens turned higher on the day.
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The biggest digital asset was down 1.2% at around $93,962 at 4:39 pm in New York after falling 2.8% earlier on Monday. It has plunged about 13% from its last record on December 17. The broader crypto market gauge, which covers smaller tokens like Ether and meme-crowd favorite Dogecoin, has reversed losses to trade up more than 1%. Dogecoin itself managed to rise by almost 4%.
The crypto market is torn between optimism over a friendlier regulatory environment under the new Trump administration and concern that stubbornly high inflation will slow the pace of interest rate cuts by the Federal Reserve. Monday's recovery coincided with Republican Senate Majority Leader John Thune's announcement of committee assignments for the next Congress, including the selection of Senator-elect Bernie Moreno, a crypto-friendly Ohio Republican, to the chamber's Banking Committee.
Bitcoin is coming off its first weekly decline since Trump was elected, sliding 7.5% in the seven days through Sunday. The Fed on Wednesday delivered a third straight interest rate cut while signaling a slower pace of monetary easing next year to keep inflation in check, sending global stocks into a tailspin. The hawkish pivot also dampened the speculative spirits unleashed in the crypto market by Trump's promise of friendly regulations and his support for a national Bitcoin stockpile. A record outflow of US exchange-traded funds investing directly in Bitcoin last week will weigh on prices in the near term, said Sean McNulty, director of trading at liquidity provider Arbelos Markets.
“We should hold the $90,000 level for Bitcoin until the end of the year, but if we break below that could trigger a further liquidation,” McNulty said, adding that “significant downside hedges” are visible in the market options last week with big buyers for January, February and March putting in $75,000 to $80,000 strikes.
Near-term price action ahead of a “bull trajectory” into the first quarter of 2025 is “still the most likely scenario,” David Lawant, head of research at major crypto broker FalconX, wrote in a note.