Bitcoin Drops Amid Fed Signals and DOJ Bitcoin Sales

Bitcoin extended its losses Thursday, falling 1.2% to $93,775.0 at 07:30 ET (12:30 GMT), with an earlier low of $92,540.0. This marked a sharp reversal from its New Year rally, as risk-driven assets tumbled on hawkish Federal Reserve signals hinting at slower rate cuts in 2025.

The sell-off intensified following reports that the U.S. Department of Justice (DOJ) received court approval to sell 69,370 Bitcoin, valued at approximately $6.5 billion, seized from the Silk Road marketplace in 2014. The sale adds significant pressure on the market, as similar sell-offs in the past have dampened prices. Coinbase, under contract with the DOJ, will manage these transactions.

The move dashed speculation that the DOJ might convert its Bitcoin holdings into a strategic reserve under incoming President Donald Trump. Despite his proposal for a national Bitcoin reserve, details remain unclear.

Broader crypto markets mirrored Bitcoin’s decline. Ether fell 1.1% to $3,305.80, while XRP dropped 0.8% to $2.3069. Solana, Cardano, and Polygon also posted losses, underscoring weakening risk appetite.

The Fed’s December meeting minutes revealed plans for a slower pace of rate cuts due to economic resilience and sticky inflation. Policymakers expressed concerns that expansionary policies under Trump could prolong inflationary pressures, keeping rates higher. Elevated interest rates typically hurt speculative assets like cryptocurrencies by reducing investor appetite for risk.

The prospect of continued rate hikes, coupled with the DOJ’s Bitcoin sales, has created a challenging environment for crypto investors, highlighting the market's sensitivity to regulatory and macroeconomic shifts.