Bitcoin Falls Below $100K After Reaching Record Highs

Bitcoin falls below $100K experienced a dramatic drop early Friday, falling below the $100,000 threshold after hitting record highs earlier this week. According to CoinDesk data, Bitcoin fell 5.9% in the past 24 hours, reaching $95,237. The decline came after the Federal Reserve’s comments on Wednesday, signaling fewer interest rate cuts in 2025, which impacted both the equity and cryptocurrency markets.

Inflation Data Adds Pressure on Markets

The latest inflation report, the personal-consumption expenditures price index, showed a smaller-than-expected increase in November, rising by only 0.1%. Economists had forecasted a 0.2% increase. While this was a slower pace of inflation, the annual rate remains at 2.4%, above the Fed’s 2% target, which is crucial for both stocks and cryptocurrencies.

The Fed’s Stance on Interest Rates and Inflation

The Fed’s interest rate cuts depend on inflation trends and how fast the central bank meets its target. Slower inflation decreases rate cuts’ likelihood. This could significantly impact both stock and cryptocurrency markets. The central bank’s decisions will shape market behavior based on inflation control progress.

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Cryptocurrency Sector Feeling the Pressure

Market strategist Louis Navellier noted that the entire cryptocurrency sector is experiencing pressure following the downturn in the stock market. On Wednesday, the S&P 500 dropped 2.95%, marking its worst one-day loss on a Fed-decision day in nearly 15 years. Bitcoin’s decline has mirrored the stock market’s struggles, highlighting the interconnectedness between traditional markets and cryptocurrencies.

Bitcoin’s Resilience Amid Market Fluctuations

Despite the recent dip, FxPro analyst Alex Kuptsikevich sees Bitcoin’s decline as a sign of resilience. He pointed out that Bitcoin is typically more volatile and prone to sharper losses than other assets. However, its recent performance shows it is weathering the storm better than expected.

2024: A Year of Growth for Bitcoin and Equities

The year has been strong for both the stock market and Bitcoin. The S&P 500 and Nasdaq Composite have risen by 23% and 29%, respectively, while Bitcoin has surged over 100%. The rally has been fueled by the expectation that the incoming Trump administration will loosen crypto industry regulations.

Cyclical Nature of Bitcoin’s Price Movements

Kuptsikevich cautioned that Bitcoin follows a cyclical pattern. Historically, there’s often uncertainty at the end of the year before major price movements, with key psychological levels like the $100,000 mark serving as milestones. He believes that after the recent acceleration, driven by both market hype and the liquidation of short positions, Bitcoin could see further growth in the coming year.