Bitcoin Experiences First Monthly Decline in Five Months Due to 'Profit-Taking' Sales

Surge in Profit-Taking Sales After Surpassing All-Time High of $108,000

Net Outflow of 2.6 Trillion Won from Bitcoin ETF Since December 19

Expansion of U.S. University Endowment Investments from This Year

Bitcoin's record-breaking rally in 2024 wavered at the year's end, marking its first monthly decline in December since August of the previous year.

Bitcoin (BTC) ended the year with a 3.2% decline in the U.S. market. Ironically, this was due to American investors taking profits after a rally triggered by Trump's election victory, pushing the price to an all-time high of $108,315 in mid-December. This is a result of profit-taking following a short-term surge.

Additionally, diminished expectations for interest rate cuts dampened demand for digital assets. On December 18, the Federal Reserve showed that it had reduced its forecast for the number of rate cuts this year to two, down from the four anticipated at the September meeting.

According to data collected by Bloomberg on the 1st (local time), 12 Bitcoin Exchange-Traded Funds (ETFs) in the U.S. saw a net outflow of approximately $1.8 billion (2.65 trillion won) since December 19. Open interest in Bitcoin futures, overseen by CME Group, is considered a measure of interest from U.S. institutional investors and fell about 20% from its December peak.

Nevertheless, Bitcoin outperformed gold and global stock indices last year with a 120% return.

QCP Capital mentioned in a memo to investors that "the reallocation of assets by institutions could be a major catalyst in January."

Bitcoin is likely to be included in assets as institutional investors adopting it have broadened, with U.S. university endowments adding it to their investment lists from this year. Therefore, if Bitcoin's dominance strengthens and spot prices stabilize, volatility is expected to decrease somewhat, making its volatility dynamics closer to that of stocks.

Bitcoin was trading at $93,518 (137.63 million won), down 0.20%, at 2:55 PM Singapore time on the 1st. Smaller coins like Ethereum and Dogecoin also saw slight declines.

Guest reporter Kim Jung-ah kja@hankyung.com