Recession fears, US policy shifts, and investor withdrawals fuel market downturn
Bitcoin plunges amid broad market sell-off
Bitcoin has fallen below $80,000, extending its recent losses as recession fears and shifting US policies weigh on investor sentiment. The leading cryptocurrency hit a low of $79,170 on Monday, continuing a steep decline from recent highs. The broader crypto market followed suit, with Ethereum dropping to $2,000, Solana down 9%, and Dogecoin falling 8%.
The latest downturn coincides with turmoil in traditional financial markets, where Wall Street suffered its worst sell-off in months. Investors are pulling away from risk assets, mirroring the decline seen in tech stocks. Bitcoin’s total market value has now wiped out all gains since November.
Trump administration’s crypto stance fuels uncertainty
The sell-off follows a week of policy shifts from the White House, where President Donald Trump reaffirmed his commitment to making the US a global bitcoin leader. Treasury officials announced plans to create a “digital stockpile” of bitcoin and other cryptocurrencies, raising questions about how the government will manage its holdings.
David Sacks, Trump’s newly appointed crypto czar, confirmed that the US Treasury will focus on “maximizing the value” of its bitcoin reserves, while also overseeing a separate portfolio of cryptocurrencies, including Ethereum, Solana, and XRP. However, investors were disappointed by the administration’s lack of commitment to purchasing additional bitcoin.
Institutional investors exit as volatility spikes
Bitcoin’s bull run earlier this year was driven by the approval of spot Bitcoin ETFs, leading to major institutional adoption. However, recent data from Farside Investors indicates that institutional interest is fading. Bitcoin ETFs have recorded consecutive days of net outflows, suggesting that large investors are pulling back amid market volatility.
At the same time, fears of a potential US recession have rattled investors. Trump recently acknowledged the economic downturn, calling it a “period of transition.” With uncertainty mounting, many investors are turning to gold instead of bitcoin as a hedge, further pressuring the crypto market.
More downside ahead?
Analysts warn that the worst may not be over. Crypto investor Arthur Hayes predicts that if bitcoin falls to $70,000, selling pressure could intensify, triggering a “violent” market reaction. Other analysts, including those at 10x Research, estimate bitcoin could slide to $72,000 in the short term, while Ethereum could dip as low as $1,600.
