Following stock markets, bitcoin and cryptocurrency prices have plummeted as there are concerns that the price of bitcoin may be about to plummet.
The price of bitcoin has fallen below $80,000, which has caused the whole cryptocurrency market to plummet, wiping out $1 trillion in value in just one month (despite optimistic speculators wagering that US President Donald Trump will be a “game-changer”).
The CEO of BlackRock, the biggest asset manager in the world, has cautioned that Trump’s trade policies could increase inflation, casting doubt on expectations that the Federal Reserve will lower interest rates through 2025, alongside Elon Musk’s unexpected warning about the price of cryptocurrencies.
According to Reuters, Larry Fink of BlackRock told delegates of the CeraWeek conference, “I think if we’re all getting a little more nationalistic—and I’m not saying that’s a bad thing, you know, it resonates with me—that it’s going to have elevated inflation.”
Trump’s economic plans are the “key risk,” according to Goldman Sachs researchers, who have increased their forecast of a recession over the next 12 months from 15% to 20%. The recession odds have also increased, going from 20% to 35%, according to Yardeni Research experts, who cite “Trump 2.0’s head-spinning barrage of executives orders, firings, and tariffs.”
Jerome Powell, the head of the Federal Reserve, stated last week that the Fed is not in a rush to lower interest rates because the labor market is still robust and inflation is moving slowly toward its 2% target.
The market is divided on whether rates will be lowered in May, but it is strongly wagering that the Fed will keep rates unchanged at its March meeting next week, according to the CME FedWatch Tool.
The consumer price index (CPI), the most recent measure of U.S. inflation, is scheduled to decline on Wednesday. According to the report, consumer prices are expected to have increased marginally in February, underscoring the Fed’s sluggish progress in combating inflation and possibly raising the threat of stagflation, which is defined as an economic slowdown combined with sharp price increases.
Sean Dawson, head of research at the decentralized options trading platform Derive.xyz, stated in an email that the market’s decline is primarily due to wider economic worries, such as worries about a U.S. recession and ongoing inflation.
As the macroeconomic climate deteriorates, the market is confronted with serious difficulties, and cryptocurrency assets are no different. As volatility rises in both traditional and cryptocurrency markets, traders are resorting to downside hedging techniques as a result of the growing gloomy attitude. The next several weeks will be crucial for determining how the state of the economy as a whole affects the pricing and trading patterns of digital asset.
