Bitcoin stumbles as Fed policy outlook dents crypto’s Trump trade

Many in crypto community are hopeful for enduring boom under Trump

NEW YORK — Bitcoin and the wider cryptocurrency market have made a shaky start to the year, hurt by speculation that the United States Federal Reserve’s (Fed) window for further interest-rate cuts is closing.

The digital asset briefly slid below US$90,000 on Monday — a drop of almost 5% compared with the start of 2025 — before a rebound that left it broadly flat for January. Smaller tokens such as Ether are nursing losses for the month so far.

Investors are coalescing around the prospect of a prolonged Fed rate pause due to US economic resilience and the risk of inflationary tariff and immigration policies from President-elect Donald Trump, who will be sworn in next week.

Treasury yields have surged as a result, cooling some of the ardour for crypto sparked by Trump’s vow to make the US the global capital of digital assets by creating friendly regulations and undoing a Biden administration crackdown.

Traders also dumped stocks as the selloff in Treasuries rippled across global markets. The S&P 500 index, for instance, has erased much of the gain triggered by Trump’s election victory on Nov 5.

‘Material pressure’

Higher bond yields and dollar strength have “put material pressure on risk assets,” said Richard Galvin, co-founder of hedge fund DACM. At the same time, “Trump may make crypto-specific executive orders some of his first actions post-inauguration,” he said.

Bitcoin, which reached a record high of $108,316 last month, changed hands at about $94,800 as of 6am on Tuesday in London. The token’s advance since Election Day has moderated to roughly 40%.

Many in the crypto community remain optimistic about an enduring boom under Trump. Bitcoin accumulator MicroStrategy Incorporated just reported its 10th consecutive weekly purchase of the cryptoasset, taking its stockpile to around $41 billion.

For now, the largest digital asset remains in a “corrective phase,” according to Fairlead Strategies LLC technical analyst Katie Stockton. Chart trends point to the possibility of a test of “downside” support at $87,500, she said.

Over the past four trading days, investors pulled about $1.6 billion net from US spot-Bitcoin exchange-traded funds, data compiled by Bloomberg show.

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