Bitcoin Falls 10% From $108K Peak Amid Fed Fears and Year-End Profit Taking

After reaching a record $108,000 earlier this week, Bitcoin has experienced a sharp correction, dropping as low as $95,885 on Friday. The downturn extends a week of volatility in the crypto market, with smaller tokens like Ethereum and Dogecoin seeing even steeper declines.

The Federal Reserve’s hawkish tone on Wednesday, signaling fewer rate cuts for 2025 than previously anticipated, triggered a broad sell-off across risk assets, including cryptocurrencies. Bitcoin ETFs also reported a record daily outflow of $680 million, ending a 15-day streak of continuous inflows.

What’s Behind the Decline?

Market analysts attribute the pullback to a combination of factors:

1. Fed Policy Shift: The Fed’s updated stance on interest rates has cooled speculative fervor in risk assets, including crypto.
2. Profit Taking: With Bitcoin still up nearly 50% since Donald Trump’s pro-crypto election victory on November 5, many investors appear to be locking in profits before year-end.
3. Overly Bullish Sentiment: According to QCP Capital, the market’s overly optimistic positioning made it vulnerable to corrections.

Strahinja Savic, head of data and analytics at FRNT Financial, noted that corrections like this are “pretty typical” during bull markets.

ETF Outflows Signal Shift in Sentiment

On Thursday, Bitcoin ETFs in the US saw record outflows of $680 million, breaking a 15-day streak of continuous inflows. This marks a significant shift in sentiment, as ETFs had been a major driver of Bitcoin’s rally earlier this year.

What Experts Are Saying

Chris Weston, head of research at Pepperstone Group, highlighted the importance of caution in the short term:

However, Edward Chin of Parataxis suggested the sell-off was more about timing than fundamentals:

Outlook for Bitcoin

Despite the recent drop, Bitcoin remains up more than 100% year-to-date, bolstered by a surge in ETF inflows and renewed institutional interest. While some analysts warn of further volatility in the short term, others see this as a natural pause in a larger bull market.

As Bitcoin trades at $97,878 as of Friday morning in London, investors are left wondering: Is this the start of a deeper correction, or simply an opportunity to “buy the dip”?

Bitcoin Falls 10% From $108K Peak Amid Fed Fears and Year-End Profit Taking was originally published in The Capital on Medium, where people are continuing the conversation by highlighting and responding to this story.