Bitcoin experienced a temporary decline of nearly 7% on Friday after reaching an all-time high of over $100,000 just a day earlier.
The cryptocurrency’s brief drop to $92,144 raised concerns among traders, who appeared to be hedging for a potential pullback following an extraordinary rally. The digital asset rebounded slightly to $97,325 by 9:05 a.m. in Singapore, reflecting the market’s volatility amid a broader pause in the rally that has been fueled by President-elect Donald Trump’s enthusiastic support for digital assets.
The surge in Bitcoin’s price had been spurred by optimism surrounding Trump’s upcoming administration, particularly his choice of a digital-asset advocate, Paul Atkins, to head the US Securities and Exchange Commission (SEC). Investors have rallied around the potential for clearer regulations and greater support for cryptocurrencies under Trump’s leadership, which has been widely seen as a positive shift for the sector.
Market analysts, like Josh Gilbert of eToro, acknowledge that some level of profit-taking is inevitable following such a substantial price increase.
“If we look back at previous cycles, it’s not unusual to see 20% to 40% drawdowns in the Bitcoin price during bull markets,” Gilbert noted.
This recent correction is seen as a typical moment of consolidation before the market resumes its upward trajectory. Meanwhile, demand for bearish options, such as puts with strike prices of $95,000 and $100,000, has risen, signaling that some traders are hedging against further volatility.
Despite the recent dip, the overall outlook for Bitcoin remains positive, with many market participants continuing to place bullish bets for 2025. In particular, the Deribit exchange has seen strong demand for options with strike prices as high as $110,000 and $120,000, indicating widespread confidence in Bitcoin’s long-term potential.
The market’s excitement around Trump’s pro-crypto stance has been palpable. Following the SEC announcement, Bitcoin’s price broke the $100,000 barrier, a milestone that was widely celebrated within the crypto community. Trump himself took to social media to acknowledge the achievement, claiming credit for the rally with his message:
“CONGRATULATIONS BITCOINERS!!! $100,000!!! YOU’RE WELCOME!!! Together, we will Make America Great Again!”
The appointment of Paul Atkins as SEC chairman is seen as a major development for the cryptocurrency industry, which has long sought clarity and more favorable regulations from the US government. Atkins, a known supporter of digital assets, is expected to advocate for clearer definitions of cryptocurrencies as securities or commodities, paving the way for broader institutional adoption. His expertise and understanding of both traditional finance and the crypto world are seen as crucial for fostering a more welcoming regulatory environment.
Atkins’s appointment and Trump’s broader support for the sector have created a sense of optimism in the crypto world, with many anticipating that this leadership change will help establish the US as the global hub for digital assets. However, some caution remains, as market players are aware that the path to regulatory clarity is still unfolding.
Bloomberg and the Wall Street Journal contributed to this report.
