Bitcoin Tumbles to $94K Amid Hawkish Fed and Looming DOJ Coin Sales
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Bitcoin dropped on Thursday, continuing a streak of significant losses, driven by hawkish signals from the Federal Reserve and concerns over upcoming coin sales by the U.S. government.
The world’s largest cryptocurrency almost erased its New Year rebound, mirroring broader declines in risk assets as traders adjusted expectations for a slower pace of interest rate cuts in 2025.
The broader crypto market also declined, with Bitcoin bearing the brunt of the losses. Reports emerged that the U.S. Department of Justice (DOJ) had received court approval to sell Bitcoin seized from the Silk Road marketplace, adding additional selling pressure.
The Federal Reserve's December meeting minutes emphasized the central bank's plan to slow down interest rate cuts in 2025, citing ongoing economic strength and inflation concerns.
Higher interest rates are unfavorable for speculative assets like crypto, as they dampen investor appetite for higher-risk investments. Ether steadied at $3,328.41 after significant losses earlier in the week. XRP saw a 2.2% increase, recovering slightly from its recent declines.
Meanwhile, Solana, Cardano, and Polygon saw losses between 0.4% and 6%, and meme coin DOGE dropped 3.1%.
Bitcoin fell 2.1% to $94,471.1, with the price touching $93,323.1 earlier in the session. The DOJ’s court approval to sell around 69,370 Bitcoin, valued at approximately $6.5 billion, further weighed on the cryptocurrency market.
The sale of these confiscated tokens adds significant selling pressure on Bitcoin. The DOJ has previously sold off crypto assets, with Coinbase contracted to manage the government’s crypto sales.
The news of the sale dampened expectations that the DOJ might hold onto the Bitcoin as a strategic reserve under potential future policies from President Donald Trump, who had expressed intentions to create a national Bitcoin reserve. However, the specifics of his plan remain unclear.
Paraphrasing text from "Investing.com" all rights reserved by the original author.
