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Bitcoin retreated slightly on Friday, easing from recent highs as traders became cautious ahead of the Federal Reserve’s upcoming interest rate decision. Despite a rally spurred by President-elect Donald Trump’s pro-crypto remarks, the lack of concrete policy cues limited further momentum.
Key Bitcoin Market Updates
- Price Movement: Bitcoin fell 0.7% to $99,961.4 by 00:30 ET (05:30 GMT).
- Recent Rally: Thursday’s sharp rise followed Trump’s pledge to prioritize U.S. crypto leadership but lacked substantial follow-through.
Fed Anticipation and Broader Market Sentiment
- Rate Decision Looms
- Markets are focused on next week’s Federal Reserve meeting, where a 25 basis point rate cut is widely expected.
- Uncertainty remains regarding the Fed’s long-term rate outlook, as sticky consumer inflation and stronger-than-expected producer inflation complicate forecasts.
- Dollar Strength Weighs on Crypto
- The firming U.S. dollar pressured risk-driven assets, including cryptocurrencies, as traders braced for potentially slower easing in 2025.
- High Rates Dampen Speculative Asset Appeal
- Elevated interest rates reduce the attractiveness of assets like Bitcoin, which rely heavily on speculative interest.
ETF Inflows Signal Growing Institutional Interest
Spot exchange-traded funds (ETFs) tracking Bitcoin and Ether have seen robust inflows through early December, reflecting increased optimism over the regulatory environment under Trump’s leadership.
- Bitcoin ETFs:
- 11 straight days of inflows, with Blackrock’s iShares Bitcoin Trust (NASDAQ:IBIT) leading the charge.
- Ether ETFs:
- 14 consecutive days of inflows, driven by Blackrock (NYSE:BLK) and Grayscale funds.
The sustained ETF inflows indicate rising institutional interest, offering a safer and regulated channel for crypto investments. The earlier launch of U.S. spot ETFs marked a pivotal moment for the market, with inflows accelerating after Trump’s electoral win.
Altcoins Retreat Alongside Bitcoin
Major altcoins gave up some of their weekly gains, following Bitcoin’s decline. However, altcoins have outperformed Bitcoin in recent weeks, fueled by expectations of regulatory support for a broader range of cryptocurrencies.
- Ether: Fell 0.3% to $3,916.31.
- XRP: Dropped 3.6% to $2.3458.
- Solana, Cardano, Polygon: Declined 2% to 7%.
- Dogecoin: Fell 2.7% among meme tokens.
Market Outlook
As markets await the Federal Reserve’s next move, Bitcoin and broader crypto sentiment remain highly sensitive to monetary policy signals. While ETF inflows and optimism around friendlier U.S. regulations offer support, macroeconomic uncertainties and dollar strength could limit near-term gains.
