In a stark reversal from its meteoric rise in 2024, Bitcoin finds itself back below the psychologically significant $100,000 level as the new year dawns. The largest cryptocurrency by market cap slid to $91,800 on Monday, marking a 14% pullback from December’s all-time high of $108,278 and its lowest price since decisively cracking six figures just over three weeks ago.
The sharp drawdown, while jarring for those swept up in Bitcoin’s seemingly unstoppable ascent, comes as little surprise to seasoned market watchers. A perfect storm of profit-taking, macroeconomic headwinds, and pre-inauguration jitters appears to have finally taken the wind out of the crypto market’s sails, at least for the moment.
Profit-Taking Reaches Fever Pitch
With Bitcoin up a staggering 117% on the year, it was only a matter of time before long-term holders began to cash in their chips. On-chain data reveals that profit-taking has exceeded $1.2 billion on a 7-day moving average, a substantial figure even if off the $4 billion peak hit earlier this month.
Notably, the bulk of realized profits appear to be flowing from wallets that have held BTC for multiple years, suggesting that even Bitcoin’s staunchest believers are seizing the opportunity to book some gains. This phenomenon, while understandable, has undoubtedly contributed to the current pullback.
Economic Worries Weigh Heavy
Beyond individual profit motives, the specter of a faltering economy looms large over the crypto space. Fresh data showing the lowest Chicago PMI readings since May have stoked fears that the robust post-pandemic recovery may be running out of steam.
Further compounding market anxiety is the Federal Reserve’s apparent unwillingness to cut interest rates before March at the earliest. This hardline monetary stance, while likely prudent, has sapped risk appetite across asset classes.
Stocks Slide in Sympathy
Unsurprisingly, the crypto market downdraft has spilled over into equities, particularly those with strong ties to the industry. Shares of MicroStrategy, the software company with sizable Bitcoin reserves, plunged 7% on the session. Coinbase, the largest U.S. cryptocurrency exchange, saw its stock shed 5.3%.
Even crypto mining stalwarts MARA Holdings (MARA) and Riot Platforms (RIOT) weren’t spared the carnage, with both firms losing more than 7% in value. The broader stock market has fallen in step, as the S&P 500, Nasdaq Composite, and Dow Jones Industrial Average each slipped over 1% by midday.
Looking Ahead to 2025
As the dust settles on a tumultuous year-end trading session, crypto investors are left to ponder what 2025 may have in store. With a new U.S. president set to take office and economic signals pointing every which way, the path forward is anything but certain.
Despite the near-term turbulence, not everyone is bearish on Bitcoin’s prospects. Amundsen Davis partner Joe Carlasare struck an optimistic tone, telling CoinDesk:
The market exceeded expectations in 2024, but signs of exhaustion signaled the need for consolidation…I’m optimistic but expect the path to diverge from consensus, as markets often do. Bitcoin’s adoption continues to grow, and I anticipate it will generally move in line with traditional markets.
Joe Carlasare, Partner at Amundsen Davis
With a new year comes renewed hope, but as 2024 made abundantly clear, the crypto market’s fortunes can turn on a dime. Whether Bitcoin can reclaim its perch above $100K and press onward to new heights remains to be seen, but one thing is certain: the world will be watching, now more than ever.
