The cryptocurrency market, which started the week on a promising note, faced sharp declines on Friday due to sudden selling pressures.
Sharp Decline in Cryptocurrency Prices
Bitcoin surged to approximately $88,000 on Thursday but fell to $83,800 by Friday. The CoinDesk 20 Index recorded a decline of 5.7%, with losses in altcoins such as Avalanche, Polygon, Near, and Uniswap nearing 10%. Ethereum also lost value against both the dollar and Bitcoin, hitting its lowest point relative to BTC since May 2020.
Economic Data Undermines Market Confidence
Recent economic data from the U.S. has impacted both traditional and cryptocurrency markets. The S&P 500 and Nasdaq indices fell by 2% and 2.8%, respectively. February’s Personal Consumption Expenditures (PCE) inflation data came in above market expectations, heightening uncertainties regarding the Fed’s monetary policy. Simultaneously, a 0.4% rise in consumer spending raised questions about growth prospects.
Experts Advise Caution
The high correlation between Bitcoin and tech stocks has allowed traditional markets to influence the cryptocurrency market. The decline in Bitcoin following the Nasdaq drop has once again highlighted this relationship. CoinDesk analysts noted that Bitcoin has historically filled similar price gaps, making the current retracement unsurprising. Investors are becoming increasingly cautious due to the tariffs planned by the U.S. for the coming week.
Whether a near-term recovery can be expected remains uncertain given the global economic challenges and uncertainty in both traditional and crypto markets.
