Macroeconomic uncertainty and restrictive projections from the Fed continue to put pressure on the cryptocurrency market, with Bitcoin and other assets facing volatility and significant adjustments to their valuations.
Bitcoin extends losses this Monday after a week marked by sharp falls, putting the key support of $96,000 into play. Investors remain cautious in the face of signals of macroeconomic tightening issued by the United States Federal Reserve (Fed).
Despite the recent 25 basis point cut in interest rates, the Fed anticipated that future declines will be more limited than expected, projecting only two cuts by 2025 compared to the four announced in September. Additionally, its forecast for next year includes higher inflation, driven by stronger economic growth and declining unemployment.
And as the BuenBit weekly report points out, a positive scenario for the dollar is negative for assets that compete against the greenback, such as gold and Bitcoin. However, the city exchange estimates that the current one is a correction, it is an opportunity to, for example, take advantage of the bonus payment and enter the crypto market, which offers another window of opportunity before a year that looks promising. for the industry.
The market reaction
However, this change in expectations has led markets to revalue speculative assets, such as Bitcoin, which experienced its first week of losses since Donald Trump’s presidential election. After reaching an all-time high of over $108,000 in early December, the cryptocurrency has pulled back aggressively, almost completely erasing recent gains.
“Our analysis is that the crypto industry itself has enormous tailwinds at the moment. While we recognize that there are much broader economic and geopolitical risks, the underlying growth drivers of the crypto ecosystem remain intact, which is why we urge investors to focus on long-term potential rather than short-term volatility,” they note from GoodBit.
However, the asset managed to briefly recover after hitting lows below $92,000, the lowest level recorded in December.
In the rest of the cryptocurrency market, behavior is mixed this Monday. Ethereum registers a drop of 1%, Cardano declines by 0.9%, while Solana advances marginally by 0.05%. In contrast, XRP plummets 2.5%, reflecting the prevailing volatility in the sector.
Source: Ambito
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