Arthur Hayes, famous for creating BitMEX, believes Bitcoin might tumble to $78,000. If Bitcoin breaks below this threshold, Hayes suggests the slide could extend to $75,000. He notes that prices in the $70,000-$75,000 range could spark significant market movement due to high speculative interest.
The overarching cryptocurrency market's total value dropped by 6.7%, settling at $2.7 trillion. With selling pressure the current downturn in risk-laden assets, Bitcoin might face even steeper declines.
Kicking off the week with heightened volatility, Bitcoin slipped to $80,000 on Sunday but then rallied past $82,000 by early Monday, as reported by CoinGecko.
https://twitter.com/CryptoHayes/status/1898867933679616103
Markets Under Pressure
Over the last week, Bitcoin's value has decreased by 12%, standing now 24% beneath its highest-ever valuation. Further descent might occur in the first half of 2025.
The bearish sentiment persists, as both the US Strategic Bitcoin Reserve and the digital asset summit failed to uplift the overall market confidence. This reserve, initiated by President Trump's directive on March 6, relies only on confiscated assets from criminal and civil proceedings for its funds.
Absent immediate governmental acquisitions dashed hopes for renewed institutional interest. Previously optimistic investors assumed that the U.S. would buy Bitcoin to fortify the reserve, leading to disappointment.
Despite the executive order allowing 'budget-neutral' approaches for future Bitcoin purchases, the lack of a precise plan contributed to market anxiety.
While affirming the U.S. administration’s growing acknowledgment of the crypto sector, the White House Crypto Summit, following the executive order, drew mixed responses from crypto enthusiasts.
Nic Puckrin, co-founder of Coin Bureau, highlighted the event's lack of impactful updates or policy shifts, with a common view that it was likely a classic 'sell the news' moment.
Macroeconomic Challenges and Growing Trade Conflicts
Elsewhere, the U.S.'s ongoing trade skirmishes with major partners like China and Canada show no signs of abating.
This month, the U.S. imposed a 25% levy on most imports from Canada and Mexico and raised tariffs on Chinese goods to 20%. The U.S. remains firm on using tariffs as a mechanism to address trade imbalances and security issues.
In retaliation, Canada slapped 25% tariffs on $30 billion worth of U.S. imports, aiming to escalate this to $155 billion if Trump’s tariffs continue. Similarly, China countered with tariffs up to 15% targeting U.S. agricultural exports.
Economists caution that Trump’s tariffs might accelerate inflation. Predictions from Morgan Stanley suggest a rise to 2.5%, while Goldman Sachs forecasts core PCE inflation could reach 3%.
Trump argues that tariffs and interest rate cuts are complementary, though experts believe tariffs worsen inflation, complicating rate reductions.
With rising inflation, the Federal Reserve signaled only a single rate cut in 2025, disrupting earlier expectations of multiple reductions.
Fed Chair Jerome Powell mentioned last week that the central body isn't hastening to slash rates. The Fed seeks more clarity on the Trump administration’s economic strategies before adjusting its monetary stance.
Most analysts predict that higher inflation could diminish the allure of speculative investments like cryptocurrencies. Recently, Bitcoin's performance closely matched that of equity and stock markets, which have also suffered as tariff risks dampen growth optimism.
Experts also raise concerns about a potential recession sparked by Trump’s initiatives, which might temper enthusiasm about the Bitcoin reserve’s long-haul benefits. However, inflation might continue driving asset prices up in the forthcoming years.
President Trump has not dismissed the chance of a recession in 2025. During a conversation with Fox News on Sunday, he described the economy as being in a 'transitional phase,' with plans such as tariffs positioned to overhaul the American economy, arguing that these changes will ultimately benefit the nation.
