After recent losses, Bitcoin recovered somewhat on Wednesday but was unable to initiate a sustained recovery. Uncertainty surrounding US trade tariffs and ongoing concerns about a weakening economy continue to cause caution among investors.
Trading also remained subdued in the afternoon ahead of key US inflation data. Many investors held off on larger bets.
By early European morning, Bitcoin had risen by two percent to $81,830. Overall, however, sentiment in the crypto market remains subdued. The past two weeks have brought heavy losses, and so far, there has been a lack of positive momentum to initiate a turnaround.
Bitcoin Optimism? Expert Sees Parallels to 2017
Despite the current lull, there are voices that see Bitcoin poised for a new rally. Raoul Pal, CEO of Real Vision and former Goldman Sachs executive, points to a correlation between Bitcoin’s performance and the global M2 money supply.
“This is just a normal correction. Liquidity will pick up soon, and that will boost Bitcoin and other digital assets,” he wrote on the platform X.
Pal sees parallels to 2017, when Bitcoin, after a sharp correction, began a strong upward trend. Back then, Donald Trump’s policies – particularly a stronger dollar and higher interest rates – caused a similar market reaction.
Trump Tariffs and Recession Fears Weigh on Risky Assets
The US government’s tariff policy is currently causing uncertainty. 25 percent tariffs on steel and aluminum imports have been in effect since Wednesday – a measure that Trump originally wanted to make even more drastic. Initially, he proposed a 50 percent levy on Canadian steel and aluminum imports, but then quickly withdrew it.
The back and forth is fueling uncertainty in the markets. While Trump downplayed possible recession risks, US Secretary of Commerce Howard Lutnick declared that a potential recession would be “worth the price” to implement his political agenda.
But this is not going down well in the markets. The recent wave of selling on US stock markets continued yesterday, dragging down the crypto market as well. Speculative investments like Bitcoin tend to be sold off during periods of increased market volatility.
Trump’s recent announcement of a crypto reserve also hardly generated any enthusiasm. The reason: The fund apparently does not foresee any additional purchases of digital assets.
Altcoins remain under pressure – Focus on inflation data
The situation also remained tense for altcoins. Bitcoin and other cryptocurrencies have now given up all of their gains since Trump’s election victory in November and are trading well below the record highs of January.
Ether, the number two crypto market, fell 1.1 percent to $1,873, its lowest level in over three years. XRP, Cardano, and Solana barely moved, trading near their annual lows.
Memecoins saw mixed developments: Dogecoin gained 2.3 percent, while $TRUMP fell 2.2 percent.
The inflation figures from the US, which will be released later today, are likely to be crucial for future market developments. If consumer prices remain high in February, this could leave the US Federal Reserve with little room to cut interest rates. This would pose further headwinds for speculative investments such as cryptocurrencies.
Image by Afif Ramdhasuma from Pixabay
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