Dec 23, 2024
Bitcoin’s Slide Deepens After Record Highs Last Week
Key Points:
- Bitcoin’s Current Price: The world’s largest cryptocurrency fell another 2% on Monday, trading just below $93,000 by 9 p.m. GMT (4 p.m. EST).
- Recent Decline: Bitcoin is now down 14% from its all-time high of over $108,000 last Tuesday, marking its first correction in four months.
- Market Impact: Publicly traded crypto companies also suffered, with MicroStrategy dropping 9%, Coinbase sinking 4%, and Marathon Digital, the leading bitcoin miner, slipping 4%. All three stocks are down over 20% from their recent peaks.
Big Picture:
The total cryptocurrency market has shed roughly $500 billion in value since last Monday’s record high of $3.9 trillion, according to CoinGecko. Bitcoin alone accounts for about 56% of the market, with a current capitalization of $1.9 trillion.
Why Is Bitcoin Falling?
The selloff aligns with broader declines in risk-sensitive assets, including stocks. Over the past week, the S&P 500 fell 2% following a Federal Reserve meeting where officials voiced heightened concerns about inflation and signaled fewer interest rate cuts in 2025 than previously anticipated.
Higher interest rates typically favor low-risk investments like government bonds over riskier options like cryptocurrencies. As Yuya Hasegawa, a crypto market analyst at bitbank, explains: “Monetary easing has historically boosted bitcoin prices, while tightening often causes declines.”
Perspective:
Corrections of this magnitude are not uncommon for bitcoin. The cryptocurrency experienced a 20% selloff earlier this summer and a more dramatic 70% plunge from 2021 to 2022 before rebounding to this year’s record highs.
Despite recent losses, bitcoin is still up 120% year-to-date and 36% since the U.S. election, which brought pro-crypto advocate Donald Trump back into office. Similarly, Tesla, which surged to new highs after the election, has also dipped, falling 12% from its peak but remaining 70% higher than pre-election levels.
Conclusion:
While the crypto market takes a breather, long-term investors remain optimistic, viewing the pullback as part of the asset’s historical volatility. Bitcoin’s year-to-date gains and broader market momentum underline its continued appeal in a fluctuating investment landscape.