Bitcoin dropped to a 3-1/2-month low on Friday amidst uncertainty regarding U.S. President Donald Trump's tariff policies and cryptocurrency regulations. This decline in Bitcoin's value was exacerbated by waning investor confidence following a $1.5 billion hack in a competing digital currency, Ether.
The world's leading cryptocurrency, Bitcoin, saw a more than 5% decrease in value, falling below $80,000 for the first time since November 11th. According to Joshua Chu, Co-Chair of the Hong Kong Web3 Association, "Bitcoin's fall below $80k shows that positive sentiments from a crypto-friendly administration and high-profile endorsements have run their course."
Since mid-December, Bitcoin has lost a quarter of its market value. This downward trend began when it reached over $105,000 amidst expectations of favorable policies from the Trump administration regarding Bitcoin investments and regulations. However, the lack of concrete developments in this regard caused the initial optimism to fade.
Kyle Rodda, senior financial market analyst at Capital.com, explained that the momentum slowed as there was no fresh news driving the positive narrative. Additionally, the decrease in the value of prominent tech stocks on Wall Street has impacted the cryptocurrency market, with Bitcoin suffering from the broader tech sector sell-off.
Meanwhile, Ether, the second-largest cryptocurrency, faced a decline of nearly 6%, trading at $2,149.38, close to its lowest level since January 2024. Investors have also been withdrawing funds from Bitcoin-backed exchange-traded funds amidst global economic uncertainty.
The unease among global investors stems from concerns about potential changes in the U.S. economy under the Trump administration, including plans for tariffs on imports from Canada, Mexico, and China. The recent theft of $1.5 billion worth of Ether in a hack on Bybit, one of the largest cryptocurrency exchanges, further shook investor confidence.
Reuben Conceicao, chief strategy officer at Metasig, highlighted that these market movements are influenced by various macroeconomic factors, including limited Federal Reserve rate cuts, geopolitical uncertainties, and concerns surrounding recent tariff announcements and the Bybit hack. Amidst these challenges, maintaining enthusiasm for Bitcoin is difficult when larger economic issues are at play.