Bitcoin at $109,000 seems to be just a distant memory. The world's largest cryptocurrency has dropped 15% over the past month - and is currently trading at a 24% discount from its all-time high of $109,114.88 set on Donald Trump's inauguration day.
And although the president played a key role in driving BTC prices higher over the past year, he is also responsible for the collapse of this price.
Remember: this is a digital asset closely related to the stock market - and Wall Street is currently undergoing a major correction, driven by a series of headlines related to Trump's tariffs.
To put all of this into the right context, the S&P 500 has lost over $5 trillion in value over the past three weeks. That is equivalent to the entire market capitalization of Bitcoin... multiplied by three.
Daily investors are extremely worried, and cryptocurrency enthusiasts are also worried. The disproportionate selling of altcoins means that some traders have reported an 80% or 90% reduction in their investment portfolios.
That brings us to the next question: when will cryptocurrencies rise in price again?
Specifying the exact timing for this is a fool's errand — the market is a capricious beast — but here are four key factors that may signal a reversal of fortune.
When interest rates are cut
The Federal Reserve's interest rate actions are very significant for BTC. When borrowing costs decrease, investors may seek riskier assets as they pursue profits.
Trump has repeatedly called on Fed Chairman Jerome Powell to immediately cut interest rates — and criticized the central bank when rates remained unchanged at the most recent meeting in January.
But because the Fed operates independently from the government, Powell is not obligated to bow to this pressure. He consistently emphasizes that he does not "hastily" follow the president's wishes on this issue.
There are many speculations that the Trump administration deliberately damages the US economy to force the Fed to act, but interest rate traders still believe that rate cuts are unlikely in the near future.
According to CME FedWatch tool, there is only a 1% chance of a rate cut when the Federal Open Market Committee meets at the end of this week. Meanwhile, 77.1% expect interest rates to remain unchanged at the next meeting in May. It's not until mid-June that 57.9% anticipate a slight decrease in interest rates to between 4% and 4.25%.
When Bitcoin reserves grow
The United States has taken a big step in creating a new Bitcoin reserve fund - but there has been disappointment as it has been confirmed that no more cryptocurrencies will be bought unless it can be done in a "budget-neutral manner".
It is unclear whether that is happening and when. For this reason, it is worth focusing on major economies that may follow Trump's lead. While the UK government and the Bank of Korea have confirmed they will not mimic this policy, other countries may want to allocate for fear of falling behind. If they do, it will lead to buying pressure.
When the stock market rebounds
At least in the short term, the fate of Bitcoin is tied to the stock market. So the question may not be when cryptocurrencies will rise... but when will Wall Street rise.
Tom Lee of Fundstrat, who is also a BTC enthusiast, recently predicted that March, April, and May could be "strong price increase months" as the S&P 500 surges by 10% to 15% - recovering some lost ground.
Your analysis is valuable when you accurately predict the performance of this key index throughout both 2023 and 2024.
However, it will be very necessary for Trump to soften his tough tone on trade war and tariffs to improve investor sentiment - and don't forget that the risk of recession is looming.
Based on the average level of previous S&P 500 corrections, the current recession will end in mid-May — with historical analysis showing that most typical 13.6% declines have occurred in such a reversal. If this happens, a new record high will be recorded in September.
But the rules will change if this index falls into the bear market, defined as a 20% drop from its all-time high.
Because the United States currently has a unpredictable and law-defying president, anything can happen.
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When Will Crypto Rise Again? Three Things to Note
Bitcoin at $109,000 seems to be just a distant memory. The world's largest cryptocurrency has dropped 15% over the past month - and is currently trading at a 24% discount from its all-time high of $109,114.88 set on Donald Trump's inauguration day. And although the president played a key role in driving BTC prices higher over the past year, he is also responsible for the collapse of this price. Remember: this is a digital asset closely related to the stock market - and Wall Street is currently undergoing a major correction, driven by a series of headlines related to Trump's tariffs. To put all of this into the right context, the S&P 500 has lost over $5 trillion in value over the past three weeks. That is equivalent to the entire market capitalization of Bitcoin... multiplied by three. Daily investors are extremely worried, and cryptocurrency enthusiasts are also worried. The disproportionate selling of altcoins means that some traders have reported an 80% or 90% reduction in their investment portfolios. That brings us to the next question: when will cryptocurrencies rise in price again? Specifying the exact timing for this is a fool's errand — the market is a capricious beast — but here are four key factors that may signal a reversal of fortune.
When interest rates are cut The Federal Reserve's interest rate actions are very significant for BTC. When borrowing costs decrease, investors may seek riskier assets as they pursue profits. Trump has repeatedly called on Fed Chairman Jerome Powell to immediately cut interest rates — and criticized the central bank when rates remained unchanged at the most recent meeting in January. But because the Fed operates independently from the government, Powell is not obligated to bow to this pressure. He consistently emphasizes that he does not "hastily" follow the president's wishes on this issue. There are many speculations that the Trump administration deliberately damages the US economy to force the Fed to act, but interest rate traders still believe that rate cuts are unlikely in the near future. According to CME FedWatch tool, there is only a 1% chance of a rate cut when the Federal Open Market Committee meets at the end of this week. Meanwhile, 77.1% expect interest rates to remain unchanged at the next meeting in May. It's not until mid-June that 57.9% anticipate a slight decrease in interest rates to between 4% and 4.25%.
When Bitcoin reserves grow The United States has taken a big step in creating a new Bitcoin reserve fund - but there has been disappointment as it has been confirmed that no more cryptocurrencies will be bought unless it can be done in a "budget-neutral manner". It is unclear whether that is happening and when. For this reason, it is worth focusing on major economies that may follow Trump's lead. While the UK government and the Bank of Korea have confirmed they will not mimic this policy, other countries may want to allocate for fear of falling behind. If they do, it will lead to buying pressure.
When the stock market rebounds At least in the short term, the fate of Bitcoin is tied to the stock market. So the question may not be when cryptocurrencies will rise... but when will Wall Street rise. Tom Lee of Fundstrat, who is also a BTC enthusiast, recently predicted that March, April, and May could be "strong price increase months" as the S&P 500 surges by 10% to 15% - recovering some lost ground. Your analysis is valuable when you accurately predict the performance of this key index throughout both 2023 and 2024. However, it will be very necessary for Trump to soften his tough tone on trade war and tariffs to improve investor sentiment - and don't forget that the risk of recession is looming. Based on the average level of previous S&P 500 corrections, the current recession will end in mid-May — with historical analysis showing that most typical 13.6% declines have occurred in such a reversal. If this happens, a new record high will be recorded in September. But the rules will change if this index falls into the bear market, defined as a 20% drop from its all-time high. Because the United States currently has a unpredictable and law-defying president, anything can happen.