Bitcoin hits two-month low amid Fed rate cut concerns

Bitcoin hits two-month low amid Fed rate cut concerns

On Monday, Bitcoin’s price dropped below $90,000, marking its lowest point in two months. The decline was fueled by concerns that the Federal Reserve may delay interest rate cuts, as well as ongoing macroeconomic issues like persistent inflation and fears of stagflation.

Despite the drop, Bitcoin is currently trading above $93,000, though it has fallen more than 9% over the past week.

James Toledano, COO of Unity Wallet, noted that Bitcoin and crypto markets are known for their volatility. He suggested that the pullback was partly due to profit-taking after Bitcoin hit a new all-time high of over $108,000 in December. Toledano also pointed out that macroeconomic factors, such as sticky inflation, strong economic data, and the Federal Reserve’s cautious stance on interest rate cuts, have led to reduced liquidity and less appetite for speculative assets like Bitcoin. He added that fears of stagflation and uncertainty surrounding President-elect Trump’s upcoming policies may also have dampened investor enthusiasm, contributing to short-term volatility.

However, Toledano emphasized that this price drop should not be seen as the end of the bull run. He explained that the upcoming inauguration of President-elect Trump could be a turning point, with markets expecting pro-crypto policies that might reignite buying interest. Additionally, institutional accumulation, reflected in decreasing exchange reserves, suggests that demand for Bitcoin remains strong despite lower trading volumes.

"If Trump’s policy rollout meets market expectations, it could reignite the bull run," Toledano said. "On the other hand, disappointments or external shocks could prolong the current consolidation or trigger further corrections."