Bitcoin Experiences Depletion of Funds: Hits Lowest Point since November - Bitcoin reaches its lowest point since November.
Bitcoin's journey lately has been unforgiving, with its value nosediving. Since Trump's inauguration, investor confidence has been on a downward spiral. Last Friday, Bitcoin, the world's leading cryptocurrency by market value, plummeted due to apprehension surrounding Trump's trade plans. It slipped below $80,000 for the first time since November, dropping by over 5%. Joshua Chu, Co-Chairman of the Hong Kong Web3 Association, noted, "Bitcoin's fall below $80,000 indicates that the market's exuberance over a crypto-friendly government and high-profile endorsements has reached its zenith."
The crypto market has been starved of notable developments on Trump's crypto policy since his inauguration. Kyle Rodda, head of market analysis at Capital.com, stated that the optimism started to wane once there were no new updates.
Bitcoin and Ether in a Slump
Ether, the second-largest cryptocurrency in terms of market value, suffered a significant setback as well. It dipped by nearly 6% and touched its lowest level since January 2024. Additionally, investors seem to be offloading Bitcoin-backed ETFs.
Investors are wrestling with uncertainty as the U.S.'s exceptional economic status appears to be waning while Trump prepares to impose tariffs. This uncertainty fuels fears of heightened global inflation and lower growth rates.
Now, let's delve deeper into the factors responsible for this crypto market downturn.
Economic Uncertainty and U.S. Trade Policies
Trump's imposition of tariffs on key trade partners, including nations such as Mexico, Canada, and the EU, has spiked global economic panic. Investors are inclined towards safer havens as risky assets like cryptocurrencies take a hit.
The threat of a global trade war alongside potential economic slowdown in the U.S. further dents investor confidence in risk assets.
Challenges Within the Crypto Sector
Ethereum, in particular, has faced intense selling pressure. Productive days have turned sour as profit-taking overshadows anticipation surrounding network upgrades and growth within the ecosystem.
Furthermore, Ethereum's network congestion and high gas fees have contributed to negative investor sentiment. The emergence of competing blockchains adds to the concerns.
Recent scandals and hacks within the crypto industry, like the Bybit exchange hack, further erode investor confidence.
Regulatory Environment and Crypto Policy
While Trump's specific crypto policy has not been directly linked to the recent price declines, the regulatory environment and broader economic policies do impact investor sentiment. Cryptocurrencies are highly responsive to changes in financial and political landscapes.
In conclusion, the recent slowdown in Bitcoin and Ethereum's prices can primarily be attributed to external economic factors and internal crypto market dynamics. The absence of specific crypto policy developments from Trump suggests that broader economic and geopolitical factors have a more substantial role to play at present.
Other cryptocurrencies have also struggled alongside Bitcoin, with some fearing a continued downturn until 2024. For instance, Chu expressed concerns about Bitcoin-backed ETFs, stating, "The decrease in Bitcoin's price may negatively impact the demand for Bitcoin ETFs, potentially causing further drops in their value by 2024."
The uncertainty surrounding Trump's cryptocurrency policy and the potential impact of his trade plans on the crypto market have caused a 2% dip in other popular cryptocurrencies, like Litecoin and Ripple.
Moreover, Rodda mentioned that the lack of regulatory clarity and confusion surrounding the potential impact of tariffs on crypto businesses have contributed to the overall market fear and uncertainty, leading to a 1% decrease in the value of various altcoins.
