The steep decline in Bitcoin is worsening as global markets develop a risk-averse attitude, but an unexpected policy change from Washington might provide new energy to the digital currency.
Reports indicate that the U.S. government plans to increase its Bitcoin holdings, which—if implemented—could significantly impact the already tightening market supply.
Currently, Bitcoin is priced around $81,600, reflecting a 25% drop from its January high of $109,000, with mounting selling pressure as liquidity conditions tighten, as per CoinGecko.
“Daily tariff fluctuations and consistent ETF outflows are keeping risk assets under strain,” noted Vincent Liu, Chief Investment Officer at Kronos Research, while speaking to Decrypt. “Crypto investors are in need of a significant macro shift for sentiment to improve.”
According to data from Glassnode, Bitcoin’s recent drop below $92,000 signals a crucial turning point, coinciding with the Short-Term Holder cost basis—a vital support level whose breach often indicates a change in market sentiment.
Traders have observed a notable absence of aggressive dip-buying during this downturn. Unlike prior pullbacks that triggered renewed buying activity, many investors have opted to stay on the sidelines this time.
The Crypto Balance Distribution heatmap from Glassnode indicates that demand is decreasing as external risks—such as the Bybit hack and rising U.S. tariff disputes—encourage capital preservation over opportunistic investments.
The overall macro environment is also contributing to the risk adverse sentiment.
The ASX 200 has entered correction mode, currently down 10% from its February peak, while concerns about inflation and the U.S. Federal Reserve’s hawkish stance continue to exert pressure on traditional markets.
Investors are also facing renewed trade tensions between the U.S. and China. However, optimistic headlines from the White House are providing some encouragement for crypto investors.
During a closed-door roundtable this week, White House official Bo Hines informed leaders in the crypto industry that the Trump administration plans to accumulate as much Bitcoin as possible, underlining the government’s commitment to its recent Bitcoin reserve announcement.
This development coincides with Senator Cynthia Lummis reintroducing the Bitcoin Act, legislation that would mandate the U.S. government to acquire up to one million BTC—valued at approximately $80 billion based on current rates.
The White House has expressed support for codifying the reserve into law, though details regarding the execution of these purchases remain uncertain beyond prior announcements.
Officials insist that these acquisitions will be “budget neutral,” potentially utilizing revalued gold certificates at the Federal Reserve to fund the initiative.
Should Washington proceed with significant purchases, supply constraints may arise, creating a fundamental catalyst for future price growth.
“Bitcoin’s futures market remains in contango, indicating relative strength for Bitcoin amid greater market uncertainty,” commented Alexia Theodorou, head of derivatives at Kraken, in an emailed statement to Decrypt.
“The increasing Bitcoin dominance ratio suggests that some investors might be reallocating their capital from altcoins to Bitcoin as a safer option,” she added.
However, unless there is renewed buying interest, Bitcoin could face a prolonged period of consolidation or further correction before finding stability, according to Glassnode.
“Whether the projected rate cuts will actually take place this year is a significant macro concern,” stated Marco Lim, managing director at Solowin Holdings and founding partner of MaiCapital, while speaking to Decrypt.
“Although the Consumer Price Index (CPI) results were better than anticipated, leading to a rally in crypto and U.S. stocks, much of Trump’s influence on the crypto market appears to have already been factored in,” he concluded.
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