Bitcoin's record-breaking year is seeing a slight pullback as investors reassess the impact of President-elect Donald Trump's pro-cryptocurrency stance. The digital asset's recent surge is experiencing a cool-off period, prompting market participants to evaluate the sustainability of current prices.
The leading cryptocurrency was trading at $94,673 in New York on Friday, partially recovering from a near 3% drop the previous day. Other major cryptocurrencies, including Ether and Dogecoin, also experienced subdued price fluctuations, indicating a broader market pause.
Trump's vocal support for a crypto-friendly environment and the concept of a national Bitcoin reserve had previously fueled market optimism. However, traders are now taking profits and waiting for further clarity on the feasibility of such a reserve, leading to a more cautious market sentiment.
Furthermore, the cryptocurrency market is currently navigating a significant options expiry event. A substantial number of Bitcoin and Ether options contracts are set to expire Friday, marking one of the largest such events in digital asset history, according to prime broker FalconX. The sheer volume of contracts, exceeding $14 billion for Bitcoin on the Deribit exchange alone, introduces the possibility of increased market volatility.
Adding to market complexity, MicroStrategy Inc., a major Bitcoin holder, recently hinted at potential further Bitcoin acquisitions. While this news might typically bolster prices, Bitcoin's movement remains limited, with the cryptocurrency possibly closing December with its first monthly decline in four months. Notably, after reaching a record of $108,316 on Dec. 17, Bitcoin has since pulled back.
Investor flows in US spot-Bitcoin exchange-traded funds have also seen notable shifts. After a net outflow of $1.5 billion over four trading days, the trend reversed Thursday with a $475 million inflow. This reversal suggests a potential change in investor sentiment although the market remains unsettled.
