Bitcoin Dives to Lowest Price Since December 5
The crypto market is experiencing a rocky Monday due to poor macroeconomic data and rampant profit-taking. Bitcoin (BTC), the largest cryptocurrency, has dropped 1.8% in the past 24 hours to $91,800. This price level hasn’t been seen since December 5, when it broke through the $100,000 mark for the first time.
Bitcoin’s decline is significant, with a fall of over 14% from its record high of $108,278 on December 17. The price drop has sent shockwaves throughout the market, leaving investors wondering what the future holds for crypto assets.
Ether and Other Cryptos Also Take a Hit
Ether (ETH), the second-largest cryptocurrency, has lost less than Bitcoin, falling 0.7% to $3,320. However, it’s still 17% below its December highs and hasn’t surpassed the record $4,820 it hit in 2021.
Solana (SOL) is proving more resilient than Bitcoin, with the SOL/BTC ratio up 0.35% today. The CoinDesk 20, an index of the top 20 cryptocurrencies by market capitalization (excluding stablecoins, memecoins, and exchange coins), is also in the red, sliding 3.74%.
Ripple (XRP) and Stellar (XRM) have taken the biggest hits, down 6% and 6.3%, respectively. Litecoin (LTC) is the most resilient coin besides Ether, with a decline of only 1.9%.
Crypto-Related Stocks Also Take a Hit
Stocks of crypto-related companies are also feeling the pinch. MicroStrategy (MSTR) and Coinbase (COIN) have fallen 7% and 5.3%, respectively. Major Bitcoin mining firms like MARA Holdings (MARA) and Riot Platforms (RIOT) have dropped more than 7%.
Profit-Taking Exceeds $1.2 Billion
The selling pressure is partially caused by investors cashing out after Bitcoin shot up more than 117% this year. Profit-taking currently exceeds $1.2 billion on a seven-day moving average, which is significantly less than the December 11 peak of $4.0 billion.
However, it’s worth noting that the lion’s share of profits is being taken by investors who have held Bitcoin for many years.
Macroeconomic Factors Weighing on the Market
Macroeconomics are also weighing on the market, with the U.S. Chicago PMI (Chicago Purchasing Managers’ Index) flashing its lowest reading since May. This suggests an economic slowdown is underway in the region.
Uncertainty around the Federal Reserve’s interest-rate policy going into 2025 isn’t helping, as the central bank has signaled it will pause rate cuts until at least March. The inauguration of President-elect Donald Trump, slated for January 20, may also be playing a role.
The S&P 500, Nasdaq, and Dow Jones are down more than 1%, reflecting the overall market uncertainty.
Expert Insights
"The market exceeded expectations in 2024, but signs of exhaustion signaled the need for consolidation," said Joe Carlasare, partner at Amundsen Davis. "Looking ahead to 2025, I’m optimistic but expect the path to diverge from consensus, as markets often do."
Carlasare believes that Bitcoin’s adoption continues to grow and will generally move in line with traditional markets. However, he also expects the ride to be bumpier than in 2024.
"If the U.S. avoids a significant growth slowdown, bitcoin should perform well," he added.
What’s Next for Crypto?
As the market navigates these uncertain times, investors will need to stay vigilant and adapt to changing market conditions. While profit-taking may continue, Bitcoin’s long-term prospects remain bright.
The key takeaway from this week’s events is that crypto prices are highly volatile and can be influenced by a range of factors, including macroeconomic data and investor sentiment.
By staying informed and diversifying their portfolios, investors can navigate the choppy waters ahead and potentially reap rewards in the years to come.
