Bitcoin has just experienced its most challenging first quarter in ten years, dropping by 11.7% as market participants grapple with the economic plans of the new administration.
This performance places it 12th among the last 15 first quarters based on recent research data.
The decline raises a familiar question in the crypto community: has the cycle reached its end? The previous time bitcoin began the year so poorly was in 2015, during an extended decline following the peak in 2013 and the fallout from Mt. Gox. During that period, prices saw a modest recovery throughout the remainder of the year before thriving in 2016.
In the first quarter of 2020, during a market downturn triggered by concerns over the COVID-19 pandemic, Bitcoin experienced a 9.4% decline but later boosted to finish the year with an impressive gain exceeding 300%. In previous years that saw negative returns in Q1—such as 2014, 2018, and 2022—Bitcoin ended the year significantly lower, coinciding with the ends of prior bull markets.
Currently, the climate is uncertain. Cryptocurrency values soared after the U.S. presidential election in November, attributed to a pro-crypto campaign. Under the previous administration, the sector saw increasing regulatory clarity, and the SEC backed off from several lawsuits against crypto entities; however, not all trends are positive.
Recently, reciprocal tariffs introduced against nearly every country resulted in a staggering $5.4 trillion loss in the U.S. equity market within just two days. This has taken the S&P 500 index to its lowest point in 11 months and pushed the Nasdaq 100 into bear market territory. Although Bitcoin has shown resilience so far, its fate following the week’s opening bell remains uncertain.
Traditionally, a weak first quarter does not always predict doom for Bitcoin. Data indicates that the asset has managed to bounce back in half of the years when it started off in the negative. The current macroeconomic environment has led analysts to elevate recession probabilities, possibly testing Bitcoin’s role as a “hedge against U.S. isolation.”
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