This article examines several factors influencing the current bearish trend of Bitcoin. From monetary policy to inflation and yield curve inversion, it creates a complex picture for the cryptocurrency.
Monetary Policy
The market started declining after the Fed's December meeting when they cut their expected rate cuts for 2025. Despite expectations of further cuts, the rates remained above 4% after the March meeting. High interest rates make investments in risky assets like Bitcoin less attractive, weakening the support for the cryptocurrency.
Inflation and Its Impact
U.S. inflation is still running at 2.5%-3% in 2025, above the Fed's 2% target. The main reasons for revising the inflation forecast were tariffs. High inflation leads to tight monetary policy, which negatively affects Bitcoin.
Yield Curve Inversion: A Recession Signal
Yield curve inversion, when short-term rates are higher than long-term rates, is an indicator of a recession. According to ChatGPT, yield curve inversion has predicted nearly every recession since the 1950s. Many investors start worrying about the future, negatively impacting the market.
Current economic data continues to set the direction for Bitcoin. Despite unfavorable conditions such as high inflation and tight monetary measures, this might be a temporary phenomenon. It's important to remain rational and keep an eye on the market, as history shows Bitcoin is capable of recovering and reaching new highs even after significant downturns.
