Bitcoin continued its recovery on Thursday, partially reversing its recent losses. The price benefited from surprisingly mild inflation data from the US, which provided some relief to the market. However, the recovery remained limited, as concerns about a potential recession and an escalating trade war under US President Donald Trump continued to weigh on the market.
After falling below the $80,000 mark in early March, the world’s largest cryptocurrency has recently stabilized. A key factor was hope for somewhat more friendly regulation. Targeted dip-buying by investors also played a role. On Thursday morning, Bitcoin rose 1.8 percent to $83,511.
Experts expect a potential buy signal for Bitcoin
Some analysts see the current market sentiment as a potential turning point. For example, well-known crypto trader “Inmortal” pointed to the Crypto Fear and Greed Index, which currently signals “extreme fear” – a level that has often signaled major turning points in the past.
“Fear is at the same level as during the COVID crash and the 2022 low – and this is happening while the US is announcing a Bitcoin reserve,” Inmortal explained. Historically, the “extreme fear” market environment can last between 50 and 160 days before a sustained recovery begins.
Trade war and recession concerns weigh on the market
Despite the recent recovery, uncertainty remains high. In particular, escalating trade conflicts and the risk of a US recession are holding back the market.
Trump‘s new 25 percent tariffs on steel and aluminum have been in effect since Wednesday. The US president also announced that he would consider further measures against European exports. Markets fear that these punitive tariffs could destabilize the global economy and further fuel inflation – a scenario that would severely impact the US economy.
Trump himself appears unfazed and dismissed these concerns. Nevertheless, he has changed his position several times in the past, for example, when he temporarily exempted Canada and Mexico from tariffs. This unpredictability creates uncertainty and keeps many investors on the defensive.
Speculative investments such as cryptocurrencies are particularly sensitive to such a market environment. The year to date shows this: While the S&P 500 has declined 4.6 percent since January, Bitcoin has lost around 10 percent over the same period.
Institutional Investors Remain Cautious
The situation also remains mixed among large investors. Bitcoin and Ethereum ETFs have shown high volatility in recent days, which has resulted in significant capital outflows. On March 11 alone, Bitcoin ETFs recorded outflows of $371 million, while Ethereum ETFs lost $21.57 million.
Nevertheless, there are signs of increasing institutional adoption. The US government is signaling a more open attitude towards cryptocurrencies. Banks in the US are now officially allowed to participate in proof-of-stake networks such as Ethereum – a measure that could lead to deeper integration of crypto into the financial system in the long term.
Broader crypto market remains under pressure
Other major cryptocurrencies also remained stable on Thursday, but without making any major gains.
Ether lost slightly by 0.6 percent to $1,866, after falling to a three-year low in early March. Solana, Cardano, and XRP moved only slightly higher. Meme coins such as Dogecoin (+3.3%) and the Trump-based token $TRUMP (+4.2%), in contrast, performed somewhat better.
The next stimulus could come as early as Thursday afternoon, when new Producer Price Index (PPI) data from the US is released. These are considered an important indicator of inflation and could provide clues as to whether the US Federal Reserve will maintain its current wait-and-see stance on interest rate policy.
The Federal Reserve’s next meeting is scheduled for next week. Markets expect the central bank to leave interest rates unchanged for the time being, given the current economic outlook. As long as this assessment remains unchanged, the crypto market is likely to remain vulnerable to significant volatility.
Image by Miloslav HamĹ™Ăk from Pixabay
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