Comment on Bitcoin market

20 Aralık 2024

Market comment on behalf of Hani Abuagla Senior Market Analyst at XTB MENA

Bitcoin pulls back from record highs as Fed’s hawkish stance dampens crypto enthusiasm, though structural demand from ETFs remains robust. The leading cryptocurrency retreated over 10% from its all-time peak above $108,000, highlighting how monetary policy expectations continue to influence digital asset valuations despite growing institutional adoption.

Key Market Statistics:

• Current Price: $97,343
• Recent All-Time High: $108,000+
• Weekly Change: -10%
• YTD Performance: +140%
• Post-US Election Gain: +45%
• Daily ETF Flows: -$491.4M

Fed Policy Impact

The cryptocurrency’s sharp correction reflects the broader market’s reaction to the Federal Reserve’s cautious outlook on rate cuts. While the Fed delivered the expected third consecutive rate reduction, their projected path for 2025 proved less accommodative than anticipated, triggering profit-taking across risk assets.

ETF Flows

Despite the price volatility, the cumulative 20-day ETF flows remain strongly positive at $6.93 billion, suggesting sustained institutional appetite. BlackRock iShares and Fidelity Wise Origin products continue to dominate inflows, indicating that the spot ETF market is maturing as a key driver of bitcoin price discovery.

 

Institutional Developments

Trump’s pro-crypto stance and plans for a strategic bitcoin reserve have provided fundamental support since the November election. Meanwhile, El Salvador, despite reaching a $1.4 billion IMF deal, has reaffirmed its commitment to bitcoin as legal tender, with Bitcoin Office Director Stacy Herbert announcing continued accumulation of the country’s 5,968 BTC holdings (valued at $594 million). This comes even as the IMF agreement stipulates that tax payments will be limited to US dollars. On the institutional front, the SEC’s approval of dual Bitcoin and Ethereum ETFs from Hashdex and Franklin Templeton marks another milestone in crypto’s mainstream adoption. Franklin Templeton’s filing received accelerated clearance due to compliance with existing commodity-based trust share standards, further expanding institutional access to digital assets.

2025 Outlook

While near-term volatility may persist as markets digest the Fed’s policy trajectory, structural demand from ETFs and potential regulatory clarity under a Trump administration could provide support. The interplay between monetary policy, institutional adoption, and political developments suggests bitcoin will remain sensitive to both macro and crypto-specific catalysts through 2025.