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Almost exactly a year after rising above $90,000 for the first time in its history, Bitcoin After a huge fall the prices have fallen back to the same level.
A record-breaking rally last month propelled the cryptocurrency to a new all-time high above $125,000, with some market analysts fearing the sudden drop could be the beginning of a more sustained decline. bear market,
Bitcoin was trading at $93,000 on Monday morning, representing a 25 percent decline over the past six weeks. Bitcoin has lost about 75 percent of its value after reaching record highs in previous price cycles.
“Bitcoin falling below $100,000 could unsettle short-term traders or newcomers to the asset class,” said Gadi Chait, an investment manager at Zaporozhye Bank. Independent“People who have been in space for years recognize this pattern: We’ve seen it before, and we’ll see it again,”
According to Mr Chait, several factors could be responsible for the latest decline, including investors taking profits and adjusting their risk appetite in the market.
Other cryptocurrencies have seen even bigger losses in recent weeks, with Ethereum (ETH) and Solana (SOL) falling by nearly a third since the beginning of October. Overall, the crypto market has declined by more than $1 trillion over that period, the largest decline in its history during that time frame.
Trump’s impact
The November 2024 crypto rally was boosted by Donald Trump’s victory in the US elections. Positioning himself as the first “Crypto President,” he promised to introduce favorable regulation and establish a Bitcoin treasury.
He has stuck to some of his promises – although not to the extent that some had hoped – but other of his policies have caused chaos in the financial markets.
Shortly after Bitcoin hit new all-time highs in early October, Trump announced that the US would impose new 100 percent tariffs on Chinese imports. it triggered The largest liquidation in the history of cryptocurrencyHalf a trillion dollars was wiped out from the market in the span of just a few hours.
The selloff affected more than 1.6 million traders, while Trump’s own meme coin dropped to about 10 percent of its peak value, according to data from crypto analytics firm CoinGlass.
Despite Trump backing down from his tariff threats in late October, the crypto market is still showing no signs of recovery.
A Bitcoin ‘Santa Rally’?
Some market analysts believe that the latest sudden price correction could actually serve as a buying opportunity that will lead to short-term gains for the cryptocurrency.
“When the dust settles, the mix of low prices, strong hands and ongoing adoption becomes highly attractive,” said Nigel Green, chief executive of financial advisory firm Deavere Group.
“Volatility of this magnitude always raises concerns, but it also highlights value. This moment calls for perspective, not panic… Every major correction in Bitcoin’s history has opened the door to substantial profits for patient investors. This cycle is likely to be no exception.”
Investors are currently watching events in the US to see if this potential recovery will unfold. One factor that could increase prices could be President Trump’s proposed “tariff dividend” under which every citizen would receive $2,000. When similar lump sum payments were made during the Covid pandemic, the price of Bitcoin soared as some people chose to spend their checks on the cryptocurrency.
The decision on interest rates at the Federal Open Market Committee (FOMC) meeting next month is also likely to impact Bitcoin’s future price trajectory. Should rates be cut, as they were at record price highs in September, investors may once again look toward riskier assets like Bitcoin and other cryptocurrencies.
“The crypto market has been struggling to regain momentum since the October pandemic, and Bitcoin seems to be fighting one battle after another, dragged down by US dollar strength and higher Treasury yields, selling by long-term holders and macro uncertainty,” said Nick Pukrin, a crypto analyst at The Coin Bureau.
“When crypto and tech stocks typically move in lockstep, it’s troubling to see them diverge. This dynamic shows that Bitcoin isn’t just a proxy for the Nasdaq. It’s more sensitive to macro headwinds and liquidity concerns, but it’s also perfectly poised to break out once those concerns go away.
“The real test will be the FOMC’s interest rate decision on December 10, but it remains likely that the news will be positive, which could set the stage for a Santa rally in crypto and other risk assets.”