The optimism generated by the possibility of support for cryptocurrencies from the new US government is beginning to fade against the backdrop of current market fluctuations and sell-offs. Bitcoin showed a sharp decline, immediately falling below $90 thousand. The decline comes as investors continue to unload assets such as cryptocurrencies and growth-oriented technology stocks. However, by the time the note was published, the first cryptocurrency had recovered its fall.
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According to CNBC, the price of the leading cryptocurrency fell by 2% at the beginning of the week, reaching $92 thousand. Earlier during the day, according to Coin Metrics, the drop reached $89 thousand. However, at the time of publication of this note, the price of Bitcoin had leveled off to $94 thousand. In general, over the past week, Bitcoin has lost 9% of its value.
The decline in Bitcoin also affected other crypto assets. Ethereum (ETH) fell 7%, and the overall cryptocurrency market was down more than 5%, according to the CoinDesk 20 Index. Shares of crypto-related companies also came under pressure. Thus, Coinbase lost 4%, MicroStrategy 3%, Mara Holdings decreased by 6%, and Core Scientific by 4%.
The fall in the cryptocurrency market began last week after the publication of unexpectedly strong US employment data. That sent bond yields higher and fueled concerns about Donald Trump raising tariffs on imports from China, Mexico and Canada. As a result, the dollar strengthened, putting pressure on Bitcoin and other risky cryptocurrency assets.
«The need for liquidity is driven by currency market surges associated with strong year-end US economic performance, as well as the stock market rally. Money is now needed in other places. — explained James Davies, co-founder and CEO of the crypto trading platform Crypto Valley Exchange. “If we want Bitcoin to behave like a currency, we must accept its behavior at all times.” Now the dollar has strengthened, and everything else, including Bitcoin, has weakened significantly against it.”
Despite investor optimism at the start of 2025 due to expectations of pro-cryptocurrency policies from Congress and the White House, recent macroeconomic events have changed market sentiment. Analysts warn that the first quarter of 2025 could be more challenging for cryptocurrencies than expected. Let us recall that in 2024 Bitcoin grew by 120%, but the new year began for the leading cryptocurrency with negative dynamics.