Bitcoin’s price fell below $95,000 on Monday as geopolitical tensions and uncertainties about the Federal Reserve’s upcoming interest rate decision spooked the crypto markets. While the Fed is expected to hold rates steady, pressures from President Trump’s tariffs could complicate the economic landscape further. Analysts remain cautiously optimistic about Bitcoin’s long-term prospects amidst current volatility and macroeconomic influences.
Bitcoin has dipped below the $95,000 mark as of Monday amid rising geopolitical tensions and economic uncertainty. This drop aligns with the lead-up to an anticipated Federal Reserve interest rate decision, which has many in the crypto industry on edge. Investors are watching closely, wondering how this will play out for Bitcoin and other risk assets.
The Federal Reserve meeting is set for later this week, and predictions are leaning towards the bank maintaining the current rates somewhere between 4.25% to 4.50%. This decision comes despite pressure from President Trump who has been pushing for a reduction in rates. Fed Chair Jerome Powell has recently shown a cautious stance, pointing out that persistent inflation and unpredictable trade disruptions leave little room for rate cuts. For now, Bitcoin and wider financial markets are adopting a wait-and-see attitude as they await the Fed’s guidance.
In a related note, President Trump has ramped up trade war fears by announcing a hefty 100% tariff on foreign-made films, further igniting conversations around his “America First” policies. This follows a series of tariffs he previously imposed on steel, aluminum, and various consumer goods. While this move may not seem directly linked to monetary policy, it does stir concerns that such tariffs could increase inflation and provoke retaliation from international partners. Hence, Bitcoin, generally viewed as a hedge against fiat currency crises, experienced initial benefits from these tariff fears earlier this year, yet has since faced a downturn amid tightening U.S. policy expectations.
The recent Bitcoin price decline, sliding from over $97,000 to about $94,000, highlights the growing correlation between crypto volatility and macroeconomic factors. No longer viewed as a stand-alone asset class, Bitcoin seems increasingly influenced by aspects like Federal interest rate decisions, tariff announcements, inflation outlooks, and movements of global capital. This marks a shift from previous times when Bitcoin’s price action was driven predominantly by its internal dynamics such as mining or halving cycles. Now, it is external shocks, particularly those coming from the White House or the Federal Reserve, that are steering market volatility.
Bitcoin’s decline isn’t happening in a vacuum either; other cryptocurrencies like Ethereum have dropped by around 2.5%, while meme coins such as Dogecoin and Pepe have experienced much sharper losses. Additionally, decentralized finance platforms are seeing reduced user activity in light of the uncertain rate outlook. Despite this setback, some analysts are optimistic about Bitcoin’s long-term prospects. Crypto strategist Lina Zhang voiced this sentiment, indicating that Bitcoin is currently behaving like a high-beta macro asset, suggesting that if policy stabilisation occurs, Bitcoin might find its footing as a global hedge once again.
Looking forward, the upcoming Federal Reserve decision and the subsequent press conference are poised to be pivotal for Bitcoin’s trajectory. If the Fed hints at maintaining rates or suggests further tightening, we could see Bitcoin struggling to maintain its current levels. On the flip side, any unexpected dovish turn or increased instability from the recent tariff situation could reignite interest in decentralized assets like Bitcoin. It’s a critical time for not just the cryptocurrency, but the whole market as investors brace for what’s to come.
