The cryptocurrency market is in turmoil as Bitcoin tumbles below $80,000, triggering a massive $1 trillion wipeout in just a month. The plunge follows growing concerns over Trump’s economic policies, rising inflation risks, and uncertainty over Federal Reserve rate cuts.
Investors initially pinned hopes on Trump’s return to the White House to spark a crypto rally. However, the absence of clear crypto-friendly policies, combined with macroeconomic worries, has fueled panic selling.
Larry Fink’s Warning: Inflation Could Surge Under Trump’s Trade Policies
BlackRock CEO Larry Fink has issued a stark warning, suggesting that Trump’s trade policies could drive inflation higher, making it less likely that the Federal Reserve will cut interest rates in 2025.
“If we all are becoming a little more nationalistic—it’s going to have elevated inflation,” Fink said at the CERAWeek conference, as reported by Reuters.
The Federal Reserve, which has maintained a cautious approach, recently indicated it is in no rush to cut rates, with Chairman Jerome Powell stating that inflation remains unpredictable.
Recession Fears Mount as Analysts Raise Alarm
Goldman Sachs economists have increased their recession odds for the next 12 months from 15% to 20%, citing Trump’s economic policies as a key risk. Yardeni Research has gone even further, raising its forecast from 20% to 35%, warning that “Trump 2.0’s head-spinning barrage of executive orders, firings, and tariffs” could destabilize markets.
The CME FedWatch Tool suggests investors are betting the Fed will keep rates unchanged in March, with uncertainty over possible cuts in May. If inflation remains high, rate cuts could be delayed further, adding more pressure on risk assets like Bitcoin.
What’s Next for Bitcoin?
With Bitcoin already down over 25% from its recent peak of $109,000, investors are closely watching the Federal Reserve and the Trump administration for any signals that could stabilize the market. If inflation fears persist and interest rates remain high, Bitcoin and other cryptocurrencies could face further declines in the short term.