Bitcoin (BTC) has seen a sharp decline, dipping to $91,800, a level not seen since early December, as investors take profits following its meteoric rise earlier this month. A combination of profit-taking and a challenging macroeconomic environment is weighing heavily on the crypto market, causing volatility as the year ends.
Profit-Taking and Market Correction
Bitcoin has dropped 1.8% in the past 24 hours, marking a significant pullback from its record high of $108,278 on December 17. The cryptocurrency’s drop represents a more than 14% decline in just two weeks. Similarly, Ether (ETH) has also experienced a 0.7% drop, now sitting at $3,320, which is 17% lower than its December highs.
The recent pullback can be attributed to long-term holders cashing out profits. Bitcoin has surged over 117% this year, prompting a wave of profit-taking worth over $1.2 billion on a seven-day moving average. Although this is less than the peak of $4 billion in early December, it remains a substantial figure, especially with seasoned investors leading the charge.
Macroeconomic Factors Adding Pressure
While profit-taking has been the primary driver behind Bitcoin’s decline, broader macroeconomic concerns are also playing a role in market weakness. Recent U.S. economic data, including the Chicago PMI, which tracks the performance of the manufacturing and non-manufacturing sectors, has signaled a potential slowdown, heightening fears of an economic downturn.
Additionally, the Federal Reserve’s decision to pause interest rate cuts until at least March 2025 has added uncertainty to markets. As a result, traditional stock indices, including the S&P 500, Nasdaq, and Dow Jones, have also shown declines, with the broader market down by more than 1% on Monday. The macroeconomic outlook suggests that investors may be cautious about riskier assets, including Bitcoin.
Altcoins Struggle, Litecoin Resilient
Altcoins have not been immune to the market downturn. The CoinDesk 20 index of top cryptocurrencies is down 3.74%, with notable declines in Ripple (XRP) and Stellar (XRM), both falling by over 6%. Solana (SOL), however, has shown slightly better performance than Bitcoin, with the SOL/BTC ratio up 0.35% on the day.
Litecoin (LTC) has emerged as one of the more resilient altcoins, experiencing only a 1.9% drop despite the broader market pullback. Litecoin’s relative strength could be attributed to its lower volatility compared to other altcoins, making it a more stable option for investors during times of market uncertainty.
Outlook for Bitcoin in 2025
Despite the recent slump, the outlook for Bitcoin remains cautiously optimistic, with adoption continuing to grow worldwide. According to Joe Carlasare, partner at Amundsen Davis, while market consolidation is expected in the short term, Bitcoin is poised to align with traditional markets moving forward. If the U.S. economy avoids a severe slowdown, Bitcoin should continue to perform well, although the ride may be bumpier compared to 2024.
As we head into 2025, the path for Bitcoin could diverge from consensus expectations, but its long-term potential remains intact. The ongoing integration of Bitcoin into global finance and growing institutional adoption are expected to provide underlying support for its value, even amid potential macroeconomic headwinds.
