Dec 18 2024: Bitcoin slipped on Wednesday, ending a three-day rally that included a record high, as profit-taking set in ahead of a key Federal Reserve interest rate decision.
The cryptocurrency fell 2.4% to $103,688.0 by 01:13 ET (06:13 GMT), pulling back after briefly touching a new all-time high of $108,244 on Tuesday. The recent surge was fueled by optimism over potential crypto-friendly policies under incoming President Donald Trump, who had raised the possibility of a Strategic Bitcoin Reserve in an interview with CNBC last week.
Bitcoin Momentum Backed by Reserve Speculation and Whale Activity
Trump’s pledge for pro-crypto regulations, alongside appointments of crypto-supportive figures to key positions, bolstered Bitcoin’s rally. However, skepticism persists among analysts over the practicality of creating a Bitcoin reserve, with doubts centered on its implementation and Trump’s continued endorsement of the U.S. dollar as the dominant global currency.
Additionally, Bitcoin’s price movements were significantly influenced by large-scale purchases from whales. On-chain analyst Ali Martinez noted that Bitcoin whales acquired 70,000 bitcoins this week through Tuesday, driving demand beyond the daily mining output of 900 bitcoins. This mismatch has raised concerns of a looming supply crunch, should the trend continue.
Altcoins See Mixed Movements Ahead of Fed Decision
Altcoins mirrored Bitcoin’s caution, with most experiencing a dip as traders awaited the Fed’s decision. Ethereum, the second-largest cryptocurrency, fell 4.7% to $3,839.41, while XRP edged down 0.3% to $2.51.
Polygon slumped 6.3%, and Solana slipped slightly, while Cardano defied the broader trend, gaining over 2%. Meme token Dogecoin also shed 0.8%.
Fed Decision Looms Large Over Crypto Markets
Investors are closely watching the Federal Reserve, which is widely expected to cut interest rates by 25 basis points on Wednesday. However, attention is focused on the central bank’s projections for 2025, with concerns that sticky inflation and a resilient U.S. economy may prompt a slower pace of rate cuts. Prolonged high rates could pose challenges for cryptocurrency markets, dampening the bullish momentum seen in recent weeks.
