Bitcoin has experienced a sharp decline recently, reaching its lowest level in nearly two weeks. This decline was the result of several factors, most notably fears of stricter tariffs under US President Donald Trump. This has eroded demand for speculative assets, including cryptocurrencies, which rely on risk. The global economic situation has proven to be under increasing pressure, with experts pointing to the possibility of a US recession in 2025, which has prompted many investors to move away from riskier assets.
Bitcoin: Price Volatility and Declining Risk Appetite
Bitcoin fell 1% to $82,045.2 by 01:36 EST (05:36 GMT). The price briefly reached $81,300, marking a two-week low. Bitcoin continues to experience significant declines, largely affected by fears of an economic recession and the repercussions of the tariffs Trump is considering imposing on a group of countries.
These concerns were heightened by a report in the Wall Street Journal indicating that Trump may impose tariffs on up to 25 countries, with each country receiving a 20% tariff. Such tariff measures could significantly impact global trade and lead to retaliatory responses from major economies, increasing market uncertainty.
Speculative Assets Decline Amid Economic Headwinds
Speculative assets, such as cryptocurrencies, tend to underperform during times of economic uncertainty. Recently, Bitcoin has suffered significant losses, losing nearly 40% of its value since hitting its all-time high at the beginning of Trump’s inauguration. These significant losses reflect the general uncertainty affecting financial markets.
If this downward trend in the market continues, we may see further losses in Bitcoin prices. If market anxiety persists, the price of Bitcoin could drop to $81,617.
Significant Declines in Cryptocurrency Prices
In addition, growing fears of an economic recession have also contributed to the decline in cryptocurrency prices. Goldman Sachs raised the probability of a US recession to 35% over the next 12 months, compared to its previous estimate of 20%. The investment bank noted that this change in forecasts is due to Trump’s planned tariffs, which could lead to increased inflation and a decline in confidence in the US economy.
Across other cryptocurrencies, crypto markets witnessed a significant decline. Ethereum, the second-largest cryptocurrency by market capitalization, fell 1.5% to $1,809.93, after falling 19.2% in March. Ripple, meanwhile, fell 3.5% to $2.1022, incurring significant losses after the US Securities and Exchange Commission dropped its lawsuit against Ripple under Trump’s supervision. Other cryptocurrencies, such as Solana and Cardano, also saw significant declines. Solana prices fell slightly, while Cardano dropped by 3.4%.
Bitcoin: Investors Enter Panic
In recent days, many short-term Bitcoin investors have entered a state of panic, with Bitcoin’s price falling 1.4% over the past week. The coin also reached a low of $81,000. This decline has exacerbated anxiety among investors suffering from ongoing market volatility.
Data from CryptoQuant shows that short-term Bitcoin investors are experiencing extreme fear. Since the beginning of February, these investors have sold their coins at a sustained loss, indicating weak confidence in the market. This is due to the lack of clarity on the market’s direction, which has prompted investors to sell their coins to avoid further losses.
Bitcoin faces significant challenges amid the unstable global economic situation. Growing fears of an economic recession, coupled with Trump’s statements regarding tariffs, have increased pressure on financial markets.
The Impact of Fear and Panic on the Market
Negative sentiment among short-term Bitcoin investors was evident. The STH SOPR index fell below 1, indicating that the majority of on-chain movements occurred during losses. The data also showed that many investors sold their coins during the March declines, reflecting the prevailing panic in the market.
This fear was confirmed by the STH MVRV index falling to 0.86, indicating that short-term Bitcoin holders have sustained significant losses. Historically, when this index falls below 1 for an extended period, it typically leads to further price declines due to weak demand for Bitcoin.
Bitcoin Flows: A Selling Trend
Data from Checkonchain showed that Bitcoin flows to exchanges have increased in recent days, reflecting a sell-off trend among investors. For the first time in 12 days, Bitcoin recorded positive net flows to exchanges. These increased Bitcoin flows to exchanges indicate increased price pressures due to the sell-off. This trend has not been limited to retail investors, but has also included whales. Data from IntoTheBlock recorded a shift in cash flows from large Bitcoin holders. While Bitcoin flows to exchanges were negative in the previous period, they turned positive on the last day, increasing pressure on prices.
What does this mean for Bitcoin?
In light of these developments, the panic and fear do not appear to be ending anytime soon. Anxiety still grips Bitcoin investors, both small and large. When cash flows from whales and Bitcoin importers increase, it reflects a lack of confidence in the market, leading to further selling pressure on the currency.
