Bitcoin Falls Well Below $100,000 – What’s Going On With BTC?

Bitcoin is currently trading at around $93,000 – on Tuesday BTC was at $102,000. There are reasons for the sharp price correction. Macroeconomic factors are fueling uncertainty, and not just for BTC.

In the USA, the inauguration of Donald Trump on January 20th is casting its shadow, and BTC is also affected. The pro-Bitcoin policy announced by Trump helped the leading crypto currency to reach new all-time highs in November and December, and the rally only stopped at $108,000 per BTC. But now Bitcoin is looking battered: this week, the price fell from $102,000 to the current $93,000. Analysts see an area of ​​tension, shaped by macroeconomic factors and forecasts on Trump’s policies.

Macroeconomic uncertainties weigh on Bitcoin

Bitcoin is not alone in this, important US stock indices such as the Nasdaq and S&P 500 have also recently slipped into the red. Uncertainty had already become apparent in mid-December when the US Federal Reserve cut the key interest rate without triggering any positive impulses on crypto and stock markets. A low key interest rate usually benefits asset classes such as Bitcoin and stocks, but the Fed indicated a cautious interest rate policy for 2025 in order to further control US inflation.

There are also political uncertainties: Trump’s threats to impose high punitive tariffs on trading partners such as Mexico and Canada could cloud the economic outlook. According to Goldman Sachs, inflation could cool more quickly if Trump drops these plans. But at the same time, good data from the US labor market shows that inflation risks remain.

Risk appetite also appears to be declining at the institutional level, with Bitcoin ETFs seeing a significant withdrawal of nearly $600 million yesterday – a decline last seen following the Fed’s recent interest rate decision in December.

US Court approves sale of $6.5 billion Silk Road Bitcoin

Another factor weighing on the market is the impending liquidation of large amounts of Bitcoin by the US government. The US District Court in California has approved the sale of 69,370 seized Bitcoins worth $6.5 billion. These come from the largest crypto seizure operation ever by the US government and are closely linked to the now-closed Silk Road market platform.

According to court documents dated December 30th, 2024, signed by Chief U.S. District Judge Richard Seeborg, an objection to the confiscation of the bitcoins was dismissed. However, the approval does not mean immediate liquidation, as the process involves several administrative steps and potential appeals.

The US government had already transferred around $2 billion in Silk Road Bitcoin to Coinbase in December 2024. This development could put additional selling pressure on the Bitcoin market in the short term.

Political Context: Trump and Bitcoin

The development comes at a politically sensitive time. President Donald Trump, who in the past advised Bitcoin investors to “never sell,” is reportedly planning to build a US strategic Bitcoin reserve. This had boosted the hopes of the crypto scene, but how realistic such plans actually are under his administration remains to be seen.

Conclusion: Is the Bitcoin rally already over?

Short-term price declines are nothing new for Bitcoin and often mirror trends in the stock market. Uncertainty surrounding Trump’s policies and macroeconomic factors are currently curbing optimism, while the Silk Road Bitcoin liquidation could put additional pressure on the market.

Nevertheless, Bitcoin remains a promising store of value as “digital gold,” especially in times of economic uncertainty. Investors should wait and see the coming weeks to see how Trump’s term in office and the macroeconomic situation will affect the cryptocurrency.

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(Featured image by Traxer via Unsplash)

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