Bitcoin price drops as profit taking and significant sell wall hinders rally, analyst says

Bitcoin began the week on a weak note, falling nearly 2% to around $95,000. The digital asset has been range-bound between $90,000 and $98,000 for the past two weeks, facing persistent resistance near the psychologically significant $100,000 level.

BRN analyst Valentin Fournier highlighted significant hurdles to bitcoin breaking above $100,000. "Despite strong market catalysts and growing investor confidence, bitcoin continues to struggle with the $100,000 psychological barrier," Fournier noted in an email to The Block. "Profit-taking is evident, and a substantial sell wall of over 4,000 bitcoin, valued at approximately $384 million, must be cleared before higher levels are achievable."

A slowdown in the Fed's rate-cutting cycle could impact risk assets

One of the primary macroeconomic factors currently affecting bitcoin is the broader financial market environment, particularly expectations for U.S. Federal Reserve interest-rate decisions. Investors have recently scaled back expectations for aggressive rate cuts, with the CME FedWatch tool now setting the likelihood of a 25 basis-point rate cut at the December 18 Federal Open Market Committee meeting at 61%, down from a reading of 67% on Friday.

Anticipation over a deceleration in the Fed's rate-cut cycle supports the dollar’s recent upward trajectory. When the dollar rises, global liquidity tends to tighten, making risk assets like cryptocurrencies less attractive to investors. Since the U.S. election on Nov. 5, when the U.S. dollar index dropped to a low of 103.42, the dollar has since climbed to 106.22, according to TradingView data .

Investors will closely watch key economic indicators this week that could further support dollar strength, including the November non-farm payrolls report and speeches from Federal Reserve officials, such as Chair Jerome Powell's address at the New York Times DealBook Summit on Wednesday . These events could provide insights into inflation trends and offer clues about future monetary policy, potentially impacting both the dollar and bitcoin's price trajectory. Additionally, U.S. ISM Manufacturing data on Monday and PMI data on Tuesday will be monitored for signs of economic strength or weakness.

U.S. stock market surges to record highs despite tariff concerns

Despite bitcoin's modest price correction over the past 24 hours, U.S. stocks have reached record highs even as president-elect Donald Trump’s proposed tariffs raise concerns about potential disruptions to international trade. U.S. equity indices wrapped up both the week and the month of November on a strong note, with the Dow Jones and SP 500 hitting fresh record highs on Friday. In November, the Dow climbed an impressive 7.5%, while the SP 500 reported a solid 5.7% gain, and the Nasdaq 100 followed with a 5.2% increase.

However, economists caution that Trump's proposed broad-based tariffs could increase the cost of everyday goods in the U.S. due to global supply chain complications and could also instigate a potential slowdown in global economic growth. However, the president-elect has argued that such measures could revive domestic manufacturing and strengthen the U.S. government’s leverage in trade negotiations.

Despite ongoing fears of protectionist policies, deVere Group CEO Nigel Green remains optimistic about the long-term outlook for risk assets. "Investors are reassessing their strategies for the coming year, looking to capitalize on sectors set to benefit from a more business-friendly environment," Green told The Block. "With equities already delivering an exceptional year and a historically strong December ahead, the stage is set for further gains."

Green predicts an 80% chance of a positive market finish this year, aligning with historical trends that show December as a typically favorable month marked by strong investor activity and positive returns.