A sign reading 'We Accept Bitcoin' at a cryptocurrency exchange bureau in Istanbul, Turkey, on Friday, March 1, 2024. Bitcoin has jumped over 40% already this year atop the successful debut of the US ETFs, which directly hold the token. Photographer: David Lombeida/Bloomberg 
The largest digital asset slid below $87,000 on Friday after Federal Reserve chair Jerome Powell said there was no need to hurry interest-rate cuts. That left the token about $6,500 below a record high achieved on Wednesday.
In the derivatives sector, K33 Research said the premium paid for CME-listed Bitcoin futures over the spot market price has declined. US-based institutional investors use the contracts to take positions on the original cryptocurrency. Figures from Amberdata indicate a 24-hour surge in open interest — or outstanding contracts — for bearish options with a strike price of $80,000.
“Markets seem to be cooling down,” said Vetle Lunde, head of research at K33, adding that the narrowing of the futures premium “might have been a subtle hint of moderating risk profiles.”
Trump’s pledges
Bitcoin has jumped about 30% since the US election on 5 November in response to President-elect Trump’s pro-crypto stance. The digital asset is now viewed as one of a suite of so-called Trump trades, and speculators are wondering how much impetus the rally has left.
Trump has pledged to create a friendly regulatory framework for crypto, set up a strategic Bitcoin stockpile and make the US the global hub for the industry. A onetime crypto sceptic, Trump changed tack after digital-asset firms spent heavily during election campaigning to promote their interests. Questions remain about the feasibility and implementation timeline of his promises.
Investors poured a net $4.7-billion into US spot-Bitcoin exchange-traded funds after Election Day. The 12 funds, from issuers including BlackRock Inc. and Fidelity Investments, now have total assets of about $94-billion, based on figures compiled by Bloomberg.
Volatility expected
“It’s all pure speculative trading right now,” said James Davies, chief executive officer at on-chain futures and options trading platform Crypto Valley Exchange. “Expect lots of volatility and a lack of clear signals for a while, whilst we wait for policy announcements in the US.”
Davies flagged $90,000 as a key marker to watch to see if it acts as a “resistance level, or if we are well past it.” One of the highest concentrations of bullish Bitcoin options bets is for the $100,000 strike, data from the Deribit exchange show.
Outside of Bitcoin, smaller tokens such as second-ranked Ether and meme-crowd favourite Dogecoin were mixed on Friday, in line with easing risk appetite as traders pared bets on Fed rate cuts following Powell’s comments.