Bitcoin’s drop below $96,000 is causing a downturn in the cryptocurrency market, prompting investors to seek safer assets like the U.S. dollar......CONTINUE READING THE ARTICLE FROM THE SOURCE>>>>>
The latest rally appears to be losing steam as both retail and institutional demand show signs of weakening. While Bitcoin often moves independently of broader cryptocurrency trends, it remains highly influenced by global economic conditions.
Despite ongoing market interest, escalating trade tensions between the U.S. and China are increasing volatility. Sentiment indicators, derivatives data, and investment trends all point to rising caution among traders.
China’s announcement of new tariffs on U.S. goods is weakening risk appetite, leading Bitcoin to lose its recent bullish momentum. In response, former U.S. President Donald Trump imposes a 25% tariff on steel and aluminum imports, briefly stabilizing traditional markets and helping Bitcoin recover slightly. However, fundamental data suggest that both retail and institutional investors remain cautious.
Reports indicate that institutional Bitcoin purchases are relatively low. Between February 3 and February 7, Bitcoin ETFs in the U.S. attract $204 million in investments, significantly less than the $742.3 million in Bitcoin acquired by Strategy during the same period. A sharp decline in Bitcoin futures premiums—from 11% in early February to 8%—further signals reduced risk-taking among leveraged traders.
Investors’ preference for safer assets is evident in falling yields on U.S. Treasury notes. This trend strengthens the U.S. dollar index, reflecting heightened risk aversion in global markets.
The U.S. Federal Reserve’s latest policy signals add to Bitcoin’s struggles. Fed Chair Jerome Powell, speaking at a Senate hearing on February 11, 2025, reaffirms the central bank’s cautious approach, emphasizing that the U.S. economy remains stable. While inflation stays above the 2% target, Powell states that the Fed does not anticipate further rate cuts in the near future.
Market analysts expect only 35 basis points of monetary easing by the end of the year. Following Powell’s remarks, the U.S. dollar index dips by 0.17%, settling at 108 points. Investors now await January’s inflation data, set for release on Wednesday. If inflation remains persistently high, the Fed may extend its restrictive policy stance, limiting hopes for major interest rate cuts. Powell is also set to testify before the House of Representatives, further shaping expectations for U.S. monetary policy.
Meanwhile, global markets face renewed trade protectionism. Trump’s decision to impose a 25% tariff on steel and aluminum imports reignites concerns about a potential trade conflict with the European Union.
The foreign exchange market reacts immediately, with the Japanese yen weakening against the U.S. dollar, dropping 0.3% to 152.0, while the euro gains 0.22% to trade at $1.03. Investors increasingly turn to safe-haven assets, boosting interest in gold amid growing economic uncertainty.
As the Federal Reserve maintains its cautious stance and the White House enforces stricter trade measures, financial markets remain on edge, driving volatility across multiple asset classes.