“I wouldn’t even be in this predicament if not for you. You brought so much damn pressure onto me.” — Robert De Niro as Ace Rothstein to Joe Pesci’s Nicky Santoro in Martin Scorsese’s Casino.
Bitcoin enthusiasts might feel justified in directing their frustrations at the broader cryptocurrency market following the downturn that slashed BTC’s value by over 20%, dropping from a record high of above $109,000 just five weeks prior to as low as $87,000 earlier on Tuesday.
Bitcoin reached that peak the day before the presidential inauguration amidst a speculative craze for memecoins, which peaked when the Trump administration thought launching tokens linked to the new president and first lady was wise. These tokens soared initially but soon plummeted, resulting in significant losses for everyone except insiders.
SOL, the native token of the Solana blockchain where many memecoins were launched, has fallen over 50% since that moment, leading the decline among major cryptocurrencies since that January weekend.
Bitcoin supporters were promised a Strategic Bitcoin Reserve but were instead met with TRUMP and MELANIA.
Bybit hack delivers a setback
Despite the significant decline in memecoins and the associated fallout in the wider crypto ecosystem over the preceding weeks, bitcoin largely maintained a narrow trading range, remaining relatively close to its peak. Just 96 hours ago, the world’s foremost cryptocurrency appeared to be climbing, positioning itself to reclaim the $100,000 mark.
Then the Bybit hack occurred.
While bitcoiners quickly highlighted that the exploit was unrelated to Bitcoin and instead showcased the inherent vulnerabilities within Ethereum’s framework, the ensuing drop in ETH (which has decreased by 15% and continues to fall) and other cryptocurrencies inevitably impacted BTC.
Bulls turn to bears
“Our outlook for this cycle is well above $108,000, so we convince ourselves that we couldn’t possibly have reached a peak already,” stated self-proclaimed permabull StackHodler on X Tuesday. “We have to advance in 2025, right?” he added. “The reality is that no one can say for certain. We just crossed the short-term holder realized price of $92,000 … We might need to revisit the 200-day moving average around $82,000.”
“DO NOT buy the dip yet; a fall into the low $80s is imminent,” warned Standard Chartered’s Geoff Kendrick, who previously predicted a $200,000 BTC by year-end. “Before buying the dip becomes appealing, I think we are in for a $1B ETF outflow day (the current worst day is -$583M).”
Foundations for the next bull run being laid
Though not facing as severe a decline as cryptocurrency, traditional markets have also been facing challenges. According to the S&P 500 Index, U.S. stocks recorded their worst week last week since Trump’s inauguration. The tech-heavy Nasdaq reached its peak in December and currently stands 5% below that mark.
Choose your reasoning: tariffs, DOGE (not the token, but the Musk-led government spending cuts), or just a general cooling of previously buoyant market sentiments, but rate markets have certainly taken note.
The U.S. 10-year Treasury yield has fallen to 4.32% from 4.80% just before Trump took office. Moreover, expectations for more lenient Federal Monetary policy have intensified. The probability of a rate cut in May has more than doubled to 30% over the last week, and the chances of two rate changes by June have increased more than threefold to 15%, based on CME FedWatch data.
“Lower U.S. Treasury yields are a significant long-term advantage for BTC,” concluded Kendrick.
