This week, the Bitcoin market continued to decline as economic concerns grew and investor confidence waned.
Bitcoin Dips Amid Economic Uncertainty
Bitcoin fell below $80,000 for the first time since November, driven by fears of potential trade wars and economic slowdown. The president's newly imposed tariffs on Canada, China, and Mexico increased trade tensions, adding more uncertainty to financial markets. Additionally, Trump's recent Fox News interview, where he didn't rule out a possible U.S. recession in 2025, further worried investors, prompting them to move away from riskier assets like cryptocurrencies.
Disappointment Over National Crypto Reserve Plan
The crypto market was also affected by disappointment over the White House’s national crypto reserve plan. Many had expected the government to begin accumulating Bitcoin and other cryptocurrencies, potentially driving up prices. However, Trump clarified that the government would not purchase additional digital assets, only holding onto those seized from illicit activities. This lack of aggressive purchasing discouraged traders who had anticipated a boost in demand.
Market Reaction to Rate Cuts
Additional market pressure came from the Federal Reserve's decision to halt interest rate cuts in 2025. Since the December statement, the cryptocurrency market has lost 25% of its market capitalization. Rising rates make traditional investments more attractive, reducing demand for cryptocurrencies.
The drop in Bitcoin and waning investor confidence highlight the impact of economic policy on the digital asset market.
