Cryptocurrency selling accelerates as economic concerns increase
- Bitcoin has fallen more than 8% since January 7, falling below $100,000 on concerns about persistent inflation, global economic uncertainty, and the potential effects of Trump’s policies.
- BitMEX founder Arthur Hayes expects the market to peak and collapse around March, suggesting that investors should wait for conditions to improve in the third quarter.
- Fidelity analyst Matt Hogan remains bullish, suggesting that countries may secretly accumulate Bitcoin as strategic reserves, as avoiding exposure could become riskier than owning some holdings.
Prices for Bitcoin Other major digital assets continued to decline for three consecutive days. sale It started on Tuesday When the largest cryptocurrency figuratively fell off a cliff, falling below the $100,000 level and continuing its downward trend ever since.
Although January 7 saw the biggest drop in price since midday that day, it is now down over 8%, and is currently trading for US$92,823 (AU$149,671).
Inflation, Trump, and Hayes
So, what caused the collapse? Concerns about sticky inflation (Read about the latest Fed meeting minutes here) and a generally bleak economic outlook coupled with uncertainty about global events.
Related to: Oklahoma legislation proposed to enable Bitcoin payroll and vendor payments
There are also concerns that Trump’s trade could be short-lived if his policies – other than the pro-crypto ones the industry hopes for – negatively impact the economy, namely through increased spending and more borrowing.
Elon Musk also raised some eyebrows with comments that his DOGE division might be so good at its job that it would have The impact of negative flow on cryptocurrency prices.
Adding to the concerns is that Arthur Hayes, founder of BitMEX and Maelstrom, is back with them His own expectations. Hayes believes we will see the market peak and crash around March:
On schedule, just like almost every year, it will be time to sell in the late stages of the first quarter […] Wait for positive cash liquidity conditions to reappear in the third quarter.
Arthur Hayes
Despite the setbacks, financial analysts remain optimistic as institutional adoption gains momentum.
Can institutional adoption buck the trend?
It’s the first birthday of Bitcoin spot trading funds (ETFs), and governments are slowly but surely beginning discussions about adding some “digital gold” to their national reserves and… Coding It goes beyond being just a buzzword.
Matt Hogan, a Fidelity Digital Assets research analyst, recently emphasized how important the National Strategic Reserve narrative could become.
On January 7th paper Titled “2025 Look Ahead,” Hogan said they “expect more nation-states, central banks, sovereign wealth funds and government treasuries to look to establish strategic positions” in the largest cryptocurrency.
Related to: Bhutan Special Administrative Region reveals plans to hold BTC, ETH and BNB in strategic reserve
Hogan added that not having any bitcoin can backfire and turn out to be more risky than having at least some exposure.
This could be a bigger problem if the US starts with Bitcoin reserves and others follow, publicly or not.
Nation-states will likely begin to accumulate in secret. No country has an incentive to announce these plans, because doing so might influence more buyers and lead to higher prices.
Matt Hogan
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