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Bitcoin Slides Below $100,000: Powell's Rejection and Market Uncertainties

Wesley ParkFriday, Dec 20, 2024 6:36 pm ET
5min read


Bitcoin, the world's largest cryptocurrency, has experienced a significant price drop, falling below the $100,000 mark. This recent decline can be attributed to a combination of factors, including regulatory uncertainties, profit-taking by new investors, and outflows from Bitcoin ETFs. Federal Reserve Chair Jerome Powell's rejection of Bitcoin as a reserve currency has also contributed to the cryptocurrency's price volatility.

Regulatory uncertainties have played a significant role in Bitcoin's price fluctuations. Powell's comments, along with profit-taking by new investors and outflows from Bitcoin ETFs, have contributed to the cryptocurrency's price volatility. Despite these challenges, some analysts remain optimistic about Bitcoin's long-term potential, citing its attractiveness as a store of value and a hedge against economic uncertainty.

Institutional investors have significantly influenced Bitcoin's recent price fluctuations. Companies like MicroStrategy, Marathon Digital, and Semler Scientific have been purchasing Bitcoin, potentially propping up prices in the near term. Meanwhile, Bitcoin ETFs, which hold Bitcoin and need to purchase it as more investors pour money into these products, have seen large inflows since Election Day. However, Monday saw the third-largest day of outflows from Bitcoin ETFs on record, with $435.3 million exiting the category. This selling pressure, combined with profit-taking by relatively new investors who bought above $56,000, contributed to Bitcoin's slide below $100,000.

Geopolitical events and macroeconomic factors have also contributed to Bitcoin's price drop. Profit-taking by relatively new investors, who bought in above $56,000, has contributed to the sell-off. Additionally, strong outflows from Bitcoin ETFs, totaling $435.3 million on Monday, indicate investor uncertainty. Geopolitical tensions, such as those surrounding the U.S. election and regulatory clarity for cryptocurrencies, have also played a role in the price volatility. Furthermore, the Federal Reserve's rejection of Bitcoin as a reserve currency and the potential impact of rising interest rates on tech stocks may have influenced investor sentiment towards cryptocurrencies.

Powell's rejection of Bitcoin as a reserve currency may dampen institutional investors' confidence, as it signals a lack of official endorsement. However, Bitcoin's recent slide below $100,000 is primarily due to profit-taking by new investors and outflows from Bitcoin ETFs. Despite Powell's stance, companies continue to purchase Bitcoin, which could prop up prices in the near term.

Powell's rejection underscores the cryptocurrency's current limitations in global financial systems. Bitcoin's volatility and lack of regulatory clarity make it unsuitable for central bank reserves, as highlighted by Powell. However, this doesn't negate Bitcoin's potential as a store of value or a hedge against inflation. As more companies adopt Bitcoin, its integration into the financial system may evolve, but it's unlikely to replace traditional currencies in the near term.

Powell's comments may exacerbate Bitcoin's volatility in the short term. As the Fed Chair dismissed Bitcoin as a reserve currency, investors may perceive it as a negative signal, leading to increased selling pressure. This could result in a temporary decline in Bitcoin's price, as seen in the recent dip below $100,000. However, Bitcoin's long-term prospects remain intact, with its store of value thesis and hedge against global volatility still attractive to investors.


STRW, W, BBAI, SIG, CVKD...Market Cap, Turnover Rate...


In conclusion, Bitcoin's recent slide below $100,000 can be attributed to a combination of factors, including regulatory uncertainties, profit-taking by new investors, and outflows from Bitcoin ETFs. Powell's rejection of Bitcoin as a reserve currency has contributed to the cryptocurrency's price volatility. Despite these challenges, Bitcoin's long-term potential as a store of value and a hedge against economic uncertainty remains attractive to investors. As the cryptocurrency continues to evolve and gain wider acceptance, its role in global financial systems may expand, but it's unlikely to replace traditional currencies in the near term.
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dantheman2108
12/21
$MSTR dipped from $301.11 to $69, and then surged by $7 in after-hours trading.
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nrthrnbr
12/20
Geopolitical jitters + profit-taking = perfect storm. New investors cashing out faster than a meme stock short squeeze.
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Bitter_Face8790
12/20
Fed's Powell throwing shade at BTC. No reserve currency status? 🤔 No biggie. BTC's value lies elsewhere. Store of value, anyone?
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mayorolivia
12/20
Powell's FOMO moment 🤔. Fed's rejection just noise; Bitcoin's value thesis remains. Long-term HODLers won't be swayed.
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Throwaway7131923
12/20
Powell's FOMO moment, HODL tight!
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tostitostiesto
12/20
BTC volatility dance, who's still diamond hands? 🚀
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Substance_Technical
12/20
ETF outflows ouch, but long-term bullish here
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pimppapy
12/20
Store of value thesis still strong, not selling
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Most_Caramel_8001
12/20
Traditional banks skeptical, but tech giants like $AAPL already dipping toes. Crypto's future is inevitable.
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Affectionate_You_502
12/20
Fed's rejection just noise, crypto moon soon?
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OG_Time_To_Kill
12/20
MicroStrategy flex, institutions backing this dip
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bnabin51
12/20
ETF outflows hit hard. Investors spooked by Powell's comments. But institutions like MicroStrategy keep buying. Conflicted market.
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Conscious_Shine_5100
12/20
HODLing BTC through volatility. Long-term thesis intact. Short-term noise from Powell and profit-takers. 🚀 to the moon soon?
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racoontosser
12/20
Bitcoin's volatility a double-edged sword. Risk-averse folks might bail, but I'm holding. Diversification, folks!
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HJForsythe
12/20
ETF outflows hit hard. $435.3M dumped in one day. Market jitters or opportunity to buy the dip? 🤔
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