Investing.com– Bitcoin pulled back on Wednesday after a three-day winning streak and a record high, as the digital currency saw profit-taking ahead of a Federal Reserve interest rate decision.
Bitcoin fell 2.2% to $104,800.0 by 09:35 ET (14:35 GMT), after breaching the $108,000 level a day earlier.
The largest cryptocurrency reached an all-time high of $108,244 for a brief period on Tuesday. This came after incoming President Donald Trump raised the prospect of a Strategic Bitcoin Reserve, during an interview with CNBC last week.
Bitcoin supported by prospect of strategic reserve, whale trades
Trump had vowed to introduce crypto-friendly regulations if elected, with his recent nominations for key cabinet and regulatory roles showing strong pro-crypto leanings.
However, analysts remain doubtful about the feasibility of establishing a Bitcoin reserve, particularly regarding the mechanics of its formation.
Analysts believe a strategic reserve is unlikely, given Trump’s unwavering belief in the supremacy of the dollar.
Moreover, recent data indicates that large Bitcoin holders, known as whales, are significantly influencing the cryptocurrency’s price movements.
According to Ali Martinez, an on-chain analyst, Bitcoin whales had snapped up 70,000 bitcoins this week by Tuesday.
Analysts believe that the growing demand from whales has surpassed the available supply, fueling the ongoing surge in Bitcoin prices.
A total of only 900 bitcoins can be mined per 48 hours, which falls far short of meeting the substantial demand from Bitcoin whales.
Hence, there are growing concerns that if this momentum persists, a significant supply crunch could be imminent.
Worst crypto regulatory environment already behind us after Trump victory, JPM says
The Trump administration has unlocked a new era of the crypto ecosystem in the U.S., JPMorgan analysts said in a note.
In addition to bringing a sense of crypto friendliness, the new administration also appears eager to promote crypto assets by leading a dialogue on how to best regulate them and spur digital asset development in the country.
“The crypto industry has been pleading and advocating for regulatory guardrails for years, so the expectation of such future guardrails has established a sort of “floor” for the worst regulatory environment for crypto already behind us,” analysts noted.
“In other words, we think the crypto ecosystem will only become a safer, more transparent, and more productive industry from this point.”
Crypto price today: most altcoins fall ahead of Fed rate decision
Other cryptocurrencies also followed Bitcoin’s lead, as traders were cautious with the Fed meeting underway. Investors took some profit on altcoins as well, which were sitting on strong gains in recent sessions.
World no.2 crypto Ether slumped 4% to $3,842.77, extending its decline. World no.3 crypto XRP dropped over 5% lower to $2.51.
Solana inched 2.4% lower and Polygon slumped 6.1%, while Cardano lost 5.7%. Among meme tokens, Dogecoin dipped 5%.
The Fed is widely expected to cut interest rates by 25 basis points on Wednesday. But the focus is on the central bank’s long-term outlook on rates, especially in the face of sticky inflation, and a resilient economy.
The central bank may suggest a slower pace of rate cuts in 2025, implying that rates could stay higher for an extended period. This scenario could present challenges for cryptocurrency prices.
Ayushman Ojha contributed to this report.
