Bitcoin and Crypto Face $2 Trillion Fed Price Drop
Bitcoin and crypto prices have experienced a significant decline, erasing over $100 billion from the total market as concerns about a $10,000 crash resurface. The bitcoin price, which plummeted to approximately $60,000 per bitcoin last week, experienced a brief resurgence fueled by rampant speculation but has struggled to maintain those gains. As “panic” engulfs the bitcoin and crypto market, an unexpectedly strong jobs report has “collapsed” the odds of a March Federal Reserve rate cut, resulting in a significant drop in the bitcoin price. BlackRock Issues Urgent ETF Warning Following ‘Extreme’ $500 Billion Bitcoin and Crypto Price ‘Flash Crash’ Federal Reserve chair Jerome Powell is anticipated to maintain interest rates at their current levels, as the hawkish sentiment continues to impact the bitcoin price and the broader crypto market. “With the U.S. Treasury curve bear flattening with 2-year yields up eight basis points, odds of a March Fed rate cut collapsed down to almost zero,” Stephen Coltman stated.
The U.S. economy saw an impressive addition of 130,000 jobs in January, as reported on Wednesday. This figure significantly exceeded expectations of a 70,000 increase and marked a notable rebound from the 48,000 jobs added in December. “The technical picture shows bitcoin testing critical support at the $58,000 to $60,000 range, where previous bull market cycles found major accumulation zones,” Jimmy Xue said. If this level holds, we might witness a phase of consolidation between $60,000 and $70,000 as overleveraged positions are liquidated. However, a break below $58,000 would likely trigger another wave of institutional selling, potentially targeting the $52,000-$55,000 zone where longer-term holders accumulated during 2023. The likelihood of a March interest rate cut—typically viewed as a positive for bitcoin prices since it allows for more liquidity to flow into risk assets—has dropped to below 8%, as reported, a significant decline from over 20% earlier this week.
The bitcoin and crypto market is now facing the risk of falling below the critical $2 trillion mark, a significant decline from its peak of over $4 trillion in October. “The rebound is losing momentum, increasing the likelihood of a retest of last Friday’s lows at $2.2 trillion, potentially followed by a further 10% decline toward the $2 trillion level,” stated Alex Kuptsikevich. In the latest developments, the market is actively digesting the news of U.S. President Donald Trump selecting former Federal Reserve governor Kevin Warsh to succeed Fed Chair Jerome Powell when his term concludes in May. A “hawkish shift in Fed expectations” has weighed on the bitcoin price throughout the week, as noted by Andri Fauzan Adziima. He informed The Block that Trump’s selection of Warsh as his nominee indicates “tighter liquidity and fewer rate cuts ahead.”
“Traders are currently monitoring for stabilization in the $60,000-$65,000 support range or any renewed macro easing that could trigger a rebound,” Adziima stated. The market is now focused on this week’s inflation report, set to be released on Friday, with anticipated volatility across gold, stocks, bitcoin, and the broader crypto markets. “Softer inflation data would reinforce the case for lower rates,” Lukman Otunuga stated. Gold remains resilient as the dollar shows signs of weakness and rate expectations evolve. A significant move above $5,100 could ignite a new bullish phase. Amid ongoing uncertainty regarding growth and persistently high inflation, the volatility seen across currencies, equities, and crypto is poised to stay elevated.
