What Happened?
The price of Bitcoin plummeted significantly, even dropping below the $80,000 mark. Other major cryptocurrencies also suffered notable declines.
President Trump’s policies, including trade policies and concerns over a possible economic recession, triggered panic among investors. Uncertainty surrounding future monetary policy from the Federal Reserve further intensified the market’s instability.
While some analysts view this as a normal correction during a bull market and urge investors to remain patient, others attribute the downturn to specific events and take a cautious stance on the short-term market outlook.
Bitcoin Falls Below the $80,000 Threshold
Overnight, the cryptocurrency market underwent extreme turbulence. The price of Bitcoin (BTC) not only dipped below $80,000 within a few hours but even temporarily fell below $77,000. Other cryptocurrencies, such as Ethereum (ETH), Dogecoin (DOGE), and Ripple (XRP), also saw steep declines of over 10%, spreading a pervasive sense of fear throughout the market.
According to CoinMarketCap, as of the time of writing, Bitcoin had recovered slightly to $79,100, a 4% drop in the past 24 hours, while Ethereum stood at $1,859, reflecting a 9.7% decline over the same period.
This downturn affected not only cryptocurrencies themselves but also related publicly traded companies, such as Coinbase, Robinhood, and MicroStrategy. Investor panic primarily stemmed from macroeconomic uncertainty and concerns over President Trump’s policies.
Macroeconomic Factors Trigger Market Anxiety
Data from CoinShares shows that Bitcoin ETFs have experienced four consecutive weeks of outflows, totaling $4.75 billion. Last week alone saw an outflow of $867 million, which exacerbated the selling pressure on the market.
Bitcoin’s price sharply dropped on Sunday night, falling below $80,000 for the first time since February 28. Other cryptocurrencies, including Ethereum, Dogecoin, Ripple, and Cardano, also experienced declines exceeding 10% in the past 24 hours.
The market downturn has largely been attributed to macroeconomic uncertainties.
In a previous media interview, President Trump avoided directly answering whether the U.S. faces a risk of recession, which has unsettled investors.
Moreover, Trump recently signed an executive order to establish U.S. reserves for Bitcoin and digital assets. While this order appeared positive on the surface, some investors expressed disappointment over the lack of concrete implementation details.
Adding to the uncertainty, President Trump’s decision to double tariffs on imports from China and threaten tariffs on goods from Canada and Mexico has fueled concerns over trade wars and economic downturns.
Simultaneously, U.S. stock markets also experienced significant declines on Monday (the 10th), with the Dow Jones Industrial Average falling by 2.08%, the S&P 500 dropping by 2.7%, and the Nasdaq Composite plummeting by 4%, marking the largest single-day drop since September 2022.
This illustrates that macroeconomic uncertainty has impacted not only the cryptocurrency market but the broader financial market as well.
What Do Market Analysts Say?
Peter Chung, Head of Research at Presto Research, commented, “President Trump’s offhand remarks about a market crash being ‘no big deal’ and his acknowledgment of possible recession risks due to tariff uncertainties have further unsettled investors, intensifying Wall Street’s sell-off.” He believes that overall market anxiety is the primary reason behind the decline of all risk assets, not just cryptocurrencies.
Arthur Hayes, co-founder of BitMEX, advised investors to remain patient, suggesting that Bitcoin might find a bottom around $70,000. He noted that during a bull market, a 36% correction from the all-time high of $110,000 is quite normal. Hayes recommended that investors consider increasing their investments when central banks ease monetary policy.
Trading firm QCP Capital attributed the cryptocurrency market’s decline to the sell-off that followed a hack targeting the Bybit exchange last month. They warned that the hacker might continue to sell stolen assets, adding further selling pressure to the market.
Financial forecasting firm The Kobeissi Letter believes that budget cuts by the U.S. Government Efficiency Department (DOGE) have also impacted the market. They pointed out that government spending and job growth have been key drivers of the economy, and DOGE’s budget cuts could have a significant impact.
Most market analysts agree that macroeconomic factors will likely continue influencing cryptocurrency prices in the short term until the market identifies themes that can shift investor sentiment and decision-making.
This week, the market will closely monitor key U.S. economic indicators, including Tuesday’s Job Openings and Labor Turnover Survey (JOLTS), Wednesday’s Consumer Price Index (CPI), and Thursday’s Producer Price Index (PPI).
Presto Research also emphasized that next week’s Federal Open Market Committee (FOMC) meeting will be a critical event to observe whether the market might bottom out. Investors will pay close attention to Federal Reserve Chair Powell’s speech, seeking any dovish hints about potential interest rate cuts at the May or June FOMC meetings.
Sources: CNBC, Cointelegraph, The Block