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Crypto

Bitcoin Momentum Ebbs Heading Into Last Stretch of Record Year

Colin Stewart, CEO and portfolio manager at JC Clark, says investors should stay alert when navigating bitcoin, the tech sector, and major U.S. corporations.

(Bloomberg) -- Bitcoin is flagging in the last leg of a record-breaking year.

The digital asset changed hands at about $93,944 as of 06:08 a.m. in New York on Tuesday, roughly $14,000 below the all-time peak set on Dec. 17. The cryptocurrency has dipped to its 50-day moving average, which some view as a reason for caution.

The test of the closely watched average warrants “a move back to a neutral bias” amid a “consolidation phase” for the token, Fairlead Strategies LLC technical analyst Katie Stockton wrote in a note.

Bitcoin’s pullback reflects expectations of slower Federal Reserve interest-rate cuts in 2025, an outlook that has tempered the speculative ardor generated by President-elect Donald Trump’s push for relaxed US crypto regulations. The Republican has also backed the idea of creating a national Bitcoin stockpile.

In the latest developments in the US, crypto friendly Senator-elect Bernie Moreno was picked for the chamber’s banking committee. The digital-asset industry anticipates a boom based on the preponderance of crypto proponents in Trump’s incoming administration.

MicroStrategy Purchases

Meanwhile MicroStrategy Inc. announced it had purchased an additional $561 million of Bitcoin at an average price near last week’s record high. That marked the seventh week in a row of purchases for the dot-com-era software maker turned leveraged Bitcoin proxy.

Trump used to be a digital-asset skeptic but pivoted as the sector spent big on promoting its interests during US election campaigning. Bitcoin has jumped approximately 40% since he emerged victorious after Election Day on Nov. 5 and set about undoing a Biden administration crypto crackdown.

US exchange-traded funds investing directly in Bitcoin have attracted more than $12 billion of net inflows since Trump became president-elect. But the pace of subscriptions slowed lately, including the highest one-day outflow from the group of one dozen ETFs on Dec. 19.

The largest digital asset has rallied 125% so far this year, exceeding the returns from traditional investments such as global stocks and gold. A wider crypto market gauge, encompassing smaller tokens such as Ether and meme-crowd favorite Dogecoin, has also doubled.

--With assistance from Sidhartha Shukla.

(Updates prices.)

©2024 Bloomberg L.P.