Bitcoin Dips as Fed’s Hawkish Stance Sparks Record ETF Outflows

The cryptocurrency market experienced a tumultuous day on December 20, 2024. Bitcoin’s price dropped to $96,683.04, marking a 0.74% decrease.

This decline came after hitting a low of $92,115.66 earlier in the day. The market’s reaction stemmed from the Federal Reserve’s recent comments on interest rates.

Jerome Powell, the Federal Reserve Chair, stated that the central bank cannot hold Bitcoin. This remark, combined with fewer expected rate cuts for 2025, unsettled investors.

The cryptocurrency market, known for its volatility, responded swiftly to this news. Bitcoin ETFs saw record outflows, breaking a 15-day streak of positive flows.

Total outflows reached $671.9 million, surpassing the previous record set in May 2024. Fidelity’s FBTC fund led the exodus with $208.5 million in outflows. Grayscale’s BTC fund followed closely with $188.6 million.

Mark Cullen, a crypto enthusiast, questioned the impact of the Fed’s stance on Bitcoin. He wondered if this meant the end of a potential strategic Bitcoin reserve fund. His comment reflected the broader market uncertainty following the Fed’s announcements.

Bitcoin Market Update

Despite the day’s losses, Bitcoin‘s year-to-date performance remains impressive at +140%. The cryptocurrency has gained 45% since the U.S. election. Its recent all-time high surpassed $108,000.

However, the weekly change shows a 10% decrease, highlighting the market’s current volatility. Technical analysts found support for Bitcoin at the 50-Day EMA after the sharp fall.

The long-term outlook remains bullish, despite short-term fluctuations. Analysts expect Bitcoin to potentially test the $90,000 support level in the coming days.

Institutional interest in Bitcoin remains strong, despite the day’s outflows. The cumulative 20-day ETF flows stand at a positive $6.93 billion.

BlackRock iShares and Fidelity Wise Origin products continue to attract significant inflows. This trend suggests growing institutional acceptance of Bitcoin as a legitimate asset class.

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