Bitcoin fell 2.4% to $103,688.0 by 01:13 ET (06:13 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.
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.
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 4.7% to $3,839.41, extending its decline. World no.3 crypto XRP inched 0.3% lower to $2.51.
Solana inched lower and Polygon slumped 6.3%, while Cardano climbed more than 2%. Among meme tokens, Dogecoin lost 0.8%.
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.
