Bitcoin’s momentum slows as a record-breaking year winds down

Bitcoin has hit a roadblock as 2024 draws to a close, trading around $94,500 early Tuesday in Asia—down approximately $14,000 from its all-time high reached on December 17. The cryptocurrency’s retreat has brought it to its 50-day moving average, a critical technical level that many analysts consider a signal for caution.

This test of the moving average reflects a "neutral stance" as Bitcoin enters a "consolidation phase," with prices pausing their sharp moves either upward or downward, Katie Stockton, a technical analyst at Fairlead Strategies LLC told Bloomberg.

The decline in Bitcoin’s momentum aligns with tempered expectations for Federal Reserve rate cuts in 2025. These revised forecasts have cooled the speculative frenzy that had surged after President-elect Donald Trump called for relaxed cryptocurrency regulations in the U.S. Trump has further bolstered the sector’s confidence by proposing the creation of a national Bitcoin reserve.

In the U.S., Senator-elect Bernie Moreno, a vocal cryptocurrency advocate, has been appointed to the Senate Banking Committee, fueling industry optimism for a crypto-friendly environment under Trump’s administration.

Meanwhile, MicroStrategy Inc. made headlines again, announcing the purchase of $561 million worth of Bitcoin at an average price near last week's record high. This marks the company’s seventh consecutive Bitcoin acquisition as it transitions from a software firm to a cryptocurrency investment powerhouse.

Trump’s crypto transformation

Once a skeptic, Trump has become a vocal supporter of cryptocurrencies, following extensive lobbying efforts during his presidential campaign. Bitcoin prices have jumped nearly 40% since his election win on November 5, driven by his moves to reverse Biden-era regulations that tightened oversight on digital assets.

U.S. exchange-traded funds (ETFs) focused on Bitcoin have seen over $12 billion in net inflows since Trump’s victory. However, the rally has recently cooled, with December 19 recording the largest daily outflow across 12 major funds.

Bitcoin remains a standout performer in 2024, with a 125% gain year-to-date, outpacing traditional investments like global equities and gold. Broader cryptocurrency markets have also surged, with indices tracking smaller assets like Ethereum and meme favorite Dogecoin more than doubling in value.