Bitcoin fell for a third straight session on Wednesday as traders continued to take profits from the recent rally, while anticipation of more signals on US policy also prompted caution.
The world’s largest cryptocurrency has been in an extended decline since late last week, as investors took profits from the rise to record levels, and traders were somewhat disappointed as the cryptocurrency failed to exceed the desired $100,000 level.
Risk appetite was further damaged by US President-elect Donald Trump’s threat to impose more trade tariffs on several countries, raising fears of a renewed trade war.
Bitcoin fell 1.6% to $93,131.5 and the focus this week was on a series of key US economic readings, which are likely to influence interest rate expectations.
Data on the Personal Consumption Expenditures Price Index – the Fed’s preferred measure of inflation – is due later Wednesday, and is expected to weigh on the central bank’s plans to cut interest rates further.
The data comes after minutes from the Fed’s November meeting showed policymakers divided on the pace of future interest rate cuts, with officials calling for gradual easing.
A revised reading of third-quarter GDP data is also due later on Wednesday and recent signs of resilience in the US economy, particularly inflation, have raised concerns that the Fed will not have much momentum to cut interest rates quickly.
Beyond the economic data, the focus was also on what Trump’s policies regarding cryptocurrencies might entail. Trump has pledged to make America the “cryptocurrency capital” of the world, and has also floated the idea of a national bitcoin reserve.
But traders were now waiting for concrete signals on crypto policy from Trump, who is set to take office from January 20 and whose pick for Treasury Secretary and Commerce Secretary has provided some encouragement, given that both Scott Besent and Howard Lutnick have expressed their support for cryptocurrencies.
Bitcoin’s weakness has extended to major altcoins, with most tokens seeing a sustained decline in recent sessions after a strong rally in November.
The world’s No. 2 cryptocurrency, Ether, fell 0.4% to $3,419.99. XRP, Solana, Cardano, and Polygon fell between 0.9% to 5%, with XRP leading the losses and among meme tokens, Dogecoin lost 3%.
