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Bitcoin pulled back from near record highs on Friday as enthusiasm over a Donald Trump presidency waned, while overall market sentiment weakened due to rising uncertainty about U.S. interest rates.
The world’s largest cryptocurrency, which had recently climbed to unprecedented levels above $90,000 on speculation of favorable U.S. regulatory shifts under Trump, fell 2.6% to $87,634.6 by 00:26 ET (05:26 GMT). Earlier in the week, it had reached a peak of $93,226.6. Investors are now watching closely to see if Bitcoin can cross the crucial $100,000 threshold.
Bitcoin Poised for Best Week Since February
Despite Friday’s dip, Bitcoin is set to post an impressive weekly gain of around 14%, its strongest performance since late February. The cryptocurrency is also on track for its third consecutive week of gains.
The surge in Bitcoin has been fueled mainly by optimism surrounding Trump’s 2024 election victory. Significant institutional inflows into cryptocurrency-focused exchange-traded funds have played a key role in driving prices higher. Trump’s pledge to implement crypto-friendly regulations and even the possibility of establishing a national Bitcoin reserve have stoked investor confidence.
However, some of the initial euphoria appears to have cooled as traders await further details on Trump’s policy agenda. Additionally, concerns are growing that Trump’s proposed expansionary measures could exacerbate inflation, potentially keeping interest rates elevated over the long term.
Rate Concerns Weigh on Crypto After Powell’s Comments and Inflation Data
Bitcoin’s recent rally was interrupted by increased anxiety over U.S. interest rates. This was exacerbated by robust October inflation data, including both consumer and producer price reports, which hinted at persistent inflationary pressures.
Federal Reserve Chair Jerome Powell’s remarks added to the uncertainty. He indicated that the resilience of the U.S. economy allowed the Fed more time to evaluate future rate cuts, leading traders to scale back expectations for a rate reduction in December. The shift in sentiment triggered losses across various risk-sensitive assets, with Wall Street pulling back from record highs over the past two sessions.
The dollar strengthened significantly alongside a rise in Treasury yields this week, adding further pressure on risk assets, including Bitcoin.
