Bitcoin retreats from record high after US Fed cools risk appetite

BITCOIN fell for the first time in four days with speculative bets being pared across financial markets after US Federal Reserve officials suggested greater caution over how quickly they can continue reducing borrowing costs.

The original cryptocurrency fell as much as 5.3 per cent to US$100,752, a day after climbing above US$108,000 for the first time in what’s been a record-breaking rally this year. The seven largest digital tokens as measured by market value were all lower, data compiled by Bloomberg show.

“The global market is pricing in a less dovish Fed in 2025,” Zaheer Ebtikar, founder of crypto fund Split Capital, said. “As a result, crypto event traders and market makers are derisking.”

Fed officials lowered their benchmark interest rate for a third consecutive time on Wednesday (Dec 18), but reined in the number of cuts they expect in 2025. Lower rates usually increase demand for most riskier assets such as cryptocurrencies.

While the rate cut forecast is currently impacting prices, it may not have a long-term impact as Bitcoin’s correlations with the major stock indexes has fallen, according to David Lawant, head of research at crypto prime broker FalconX.

“The slower pace of expected rate cuts in 2025 is not entirely surprising but is weighing a bit on risk assets, including crypto,” Lawant said. “While macro factors traditionally influence crypto’s price action, industry-specific factors are likely to dominate over the coming weeks and months, particularly as the market anticipates policy changes from the incoming administration.” BLOOMBERG