Bitcoin’s Record-Breaking Year Faces a Late-Year Retreat
Bitcoin extraordinary 2024 rally is losing momentum as investors reassess their positions ahead of the year’s end. The cryptocurrency, which reached an all-time high of $108,316 on Dec. 17, traded at $94,673 as of Friday morning in New York, marking a near 3% pullback. Smaller cryptocurrencies, such as Ether and Dogecoin, have also seen subdued activity.
Trump’s Crypto Vision Drives Early Optimism
President-elect Donald Trump has made waves in the crypto market with promises of a Bitcoin-friendly regulatory environment. A proposal for a national Bitcoin reserve has added speculative fuel to the market. While investors initially rallied around Trump’s pro-crypto stance, profit-taking has tempered the excitement as traders await concrete policy actions.
Options Expiry Heightens Market Volatility
Friday’s record options expiry is contributing to the market’s cautious tone. According to FalconX, the event involves over $14 billion in Bitcoin options and $3.8 billion in Ether options on the Deribit exchange. Such large-scale expiries can amplify market volatility, with traders adjusting their positions to hedge risks.
“Market makers could unwind their hedges, creating a choppy trading environment,” said Sean McNulty, director of trading at Arbelos Markets. The derivatives expiry represents one of the most significant events in the digital asset space this year.
MicroStrategy’s Continued Bitcoin Accumulation
MicroStrategy Inc., a major corporate Bitcoin holder, has reiterated its commitment to the cryptocurrency. The firm, which has transitioned from software development to Bitcoin accumulation, owns over $40 billion worth of the digital asset. This week, it announced potential plans to expand its Bitcoin purchasing program, further solidifying its position as a leading corporate advocate for cryptocurrency.
Investor Sentiment Remains Mixed
Despite MicroStrategy’s bullish stance, Bitcoin appears poised for its first monthly decline in four months. December has seen net outflows of $1.5 billion from US spot-Bitcoin exchange-traded funds (ETFs) over four trading days, the largest outflow since Trump’s election victory. However, optimism resurfaced on Thursday, with ETFs recording $475 million in inflows.
Outlook for Bitcoin in 2025
As 2025 approaches, Bitcoin’s trajectory will likely hinge on several key factors, including Trump’s crypto-friendly policies, market adoption, and macroeconomic conditions. While traders remain cautious due to heightened volatility and profit-taking, long-term prospects for Bitcoin continue to attract attention from both retail and institutional investors.
The cryptocurrency market is navigating a pivotal moment, with Bitcoin’s future dependent on the realization of regulatory promises and its ability to maintain momentum in a competitive and evolving financial landscape.