Bitcoin’s (BTC) 7% drop saw its price decrease from $88,060 on March 26 to $82,036 by March 29, resulting in $158 million worth of long liquidations. This decline raised alarms for bullish investors, especially as gold reached a historic high concurrently, challenging Bitcoin’s “digital gold” narrative. Nonetheless, numerous analysts assert that a Bitcoin resurgence is on the horizon as various governments take measures to prevent economic turmoil.
The ongoing global trade war and spending reductions by the US government are viewed as temporary hurdles. A notable positive aspect is the anticipation of increased liquidity entering the markets, which could elevate risk-on assets. Analysts are optimistic that Bitcoin is poised to gain from this larger macroeconomic shift.
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One example comes from a user on a social platform who suggested that tax reductions and lower interest rates are crucial for “kickstarting” the economy. They highlighted that last year’s growth was largely maintained by government spending, which has proven to be unsustainable.
The challenging macroeconomic landscape propelled gold to a peak of $3,087 on March 28, while the US dollar weakened against other currencies, causing the DXY Index to fall from 107.40 to 104 in just a month.
Furthermore, the $93 million in net outflows from spot Bitcoin exchange-traded funds (ETFs) on March 28 further dampened sentiment, as it became clear that even institutional investors are susceptible to selling in the face of increasing recession risks.
US inflation cools amid recession apprehensions
Currently, the market assigns a 50% likelihood that the US Federal Reserve will lower interest rates to 4% or below by July 30, an increase from 46% just a month prior, as indicated by the CME FedWatch tool.
Fed Funds rate projections for July 30
The crypto market is currently experiencing a “withdrawal phase,” according to a founding partner at a crypto firm. They pointed out that recent significant developments, such as the US strategic Bitcoin reserve executive order, highlight progress in the most crucial metric: adoption.
They noted that while the tokenization of real-world assets (RWAs) is a promising trend, its impact is still limited. “The significant investment by a major firm’s billion-dollar fund is a positive step, but it pales in comparison to the $100 trillion bond market.”
They also commented:
“Whether Bitcoin’s bottom is at $77,000 or $65,000 is inconsequential; the narrative is one of early-stage growth.”
Gold separates from stocks, bonds, and Bitcoin
Seasoned traders often regard a 10% correction in the stock market as normal. However, some expect a reduction in “policy uncertainty” by early April, which would diminish the chances of a recession or bear market.
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The founder of a research firm believes the US administration may ease its tariff policies, potentially stabilizing investor sentiment. Such a shift could assist the S&P 500 in maintaining its position above the March 13 low of 5,505. Nevertheless, market volatility continues to be a significant factor as economic conditions fluctuate.
Related: Bitcoin price approaches support levels, but data indicates that ‘whales are becoming active again’
Some analysts argue that gold’s decoupling from the stock market while Bitcoin has displayed “extreme fear” suggests flaws in the digital gold narrative. However, more experienced investors maintain that Bitcoin’s underperformance reflects its early-stage adoption trends rather than a failure of its intrinsic attributes.
They articulated:
“Legislative changes are paving the way for more user-friendly products, trading some of crypto’s flexibility for mainstream acceptance. I believe adoption will accelerate, but 2025 should be seen as a foundational year rather than a turning point.”
Analysts view the recent correction in Bitcoin’s price as a response to recession fears and the ongoing tariff dispute. However, they anticipate that these challenges may prompt central banks to implement expansionary measures, ultimately creating a more favorable environment for risk-on assets, including Bitcoin.
This article is intended for informational purposes only and should not be considered legal or investment advice. The opinions expressed herein are solely those of the author and do not necessarily reflect the views of any affiliated parties.