Bitcoin's Sudden Decline

On December 19, Bitcoin experienced a significant drop, trading below $100,000 for the first time in five days. This sharp decline followed the Federal Reserve's (Fed) hint at adjusting the pace of interest rate cuts and Fed Chair Jerome Powell's firm stance against holding Bitcoin as a strategic reserve asset.

Impact of Fed's Rate Projections

The decline began after the Fed projected the year-end base rate for next year to be 3.9%, a 0.5 percentage point increase from the September forecast of 3.4%. Experts believe this projection indicates the continued strength of the dollar next year, which has contributed to the decline in Bitcoin prices.

Market Reactions and Powell's Comments

According to CoinMarketCap, Bitcoin traded below $90,900 around 11:30 AM on Dec. 19, before slightly recovering to around $110,000 by 3:10 PM. This represents a drop of over $7,000 compared to the previous day's value of approximately $97,300. On the domestic exchange Upbit, Bitcoin was trading around 151 million won at the same time.

The decline was further fueled by comments from Fed Chair Jerome Powell. Despite speculation about Bitcoin as a national strategic asset, Powell stated, "We won't hold Bitcoin." He emphasized that the legal framework for holding Bitcoin is a matter for Congress to consider, and the Fed has no plans to pursue legal amendments.

Long-term Outlook and Regulatory Developments

The Korbit Research Center released a report titled "2025 Virtual Asset Market Outlook" on the same day, predicting that the push for the U.S. Bitcoin strategic asset bill will intensify competition among nations centered on Bitcoin and stablecoins. The report also forecasted that Bitcoin would trend upward in the long term with the approval of spot ETFs and the Fed's interest rate cuts.

As of now, Bitcoin's price remains volatile, and market participants are closely watching for any further developments from the Fed and the U.S. government regarding the regulation and adoption of virtual assets. The long-term outlook for Bitcoin remains optimistic, with potential regulatory approvals and economic policies expected to influence its trajectory.