As soon as 2025 began, Bitcoin looked set to dust itself off from an end-of-year slump — and it wasn’t long before the cryptocurrency was back above $100,000.
But the much-anticipated return to six-figure territory, a key psychological threshold in confirming that the bull run was back on, proved to be short-lived.
BTC has fallen by 6% in the 24 hours from Tuesday to Wednesday, with many traders left scratching their heads for factors that could explain the pullback.
It’s always difficult to pinpoint one specific reason for a correction like this. There tends to be a multitude of issues at play, with sell-offs typically breeding further sell-offs.
So: let’s take a look at why Bitcoin is down today… and how long the dip may last.
Economic Jitters in the U.S.
While Bitcoin and Wall Street don’t always move in lockstep, it’s pretty telling that major stock indices also ended Tuesday’s session in the red.
The S&P 500 closed down 1.1% and it was even worth for the tech-heavy Nasdaq 100, which shed 1.9% of its value.
Why the doom and gloom? Because America’s economy is proving to be more resilient than first thought, and that’s plunging the prospect of further interest rate cuts into peril.
As well as an unexpected rise in the number of open vacancies for U.S. workers, there are growing signs to reinforce the narrative that inflation will remain higher for longer.
Even before the latest data, officials at the Federal Reserve had warned that they now expect to reduce the cost of borrowing twice in 2025. Earlier estimates anticipated four cuts.
Market watchers are even gloomier — and believe there’s just a 60% chance that the U.S. central bank will slash rates for a second time in the next 12 months.
Elevated interest rates are good news for savers, but bad news for riskier assets like Bitcoin, which end up looking less attractive by comparison.
Growing fears about inflation won’t be helped by real concerns over the potential impact of Donald Trump’s tariffs — with new reporting on how he intends to push them through.
CNN’s claimed that the incoming president may declare a national emergency so he has the legal justification to slap additional taxes on imports coming into the U.S. from around the world.
Trump has previously vowed to impose a 10% levy on international goods — rising to 25% for products from Canada and Mexico, and to 60% if they’re from China.
Image: SoSoValue.comBitcoin-Specific Factors
When BTC initially spiked to $100,000, there was no shortage of predictions that the bull run could continue well into 2025 and beyond — with price targets of $180,000 or more.
But we’re beginning to see some pundits roll back a little bit, with some hinting that a bear market may roll around much sooner than first thought.
BitMEX co-founder Arthur Hayes recently warned that the crypto markets could reach their top by the end of March, and thinks Trump will fail to launch a strategic Bitcoin reserve in the U.S.
But he still believes that BTC has the potential to accelerate to $1 million in the next “three to five years” as interest among consumers saving for their retirement grows.
The dramatic reversal in Bitcoin’s fortunes, which began on Tuesday, is also yet to fully reflect data tracking the funds flowing in and out of exchange-traded funds.
Intelligence from SoSoValue.com indicates that daily total net inflows into ETFs tracking BTC’s spot price hit $908.1 million last Friday, and $987 million on Monday.
But by Tuesday, when the $100,000 threshold was lost, net inflows crumbled to a mere $52 million — and it seems likely that outflows will be confirmed once Wednesday’s figures are crunched.
BTC is now 12% of all-time highs of $108,268.45 set on December 17, 2024, making this level a crucial watermark that bulls need to hit to remain in the driver’s seat.
And Donald Trump’s inauguration — which takes place in just 12 days’ time — will be a vital test, with the market looking for signs of the president moving quickly to enact his pro-Bitcoin policies as soon as he enters the Oval Office.
With SEC and CFTC chairs Gary Gensler and Rostin Behnam also stepping down on January 20, and confirmation hearings for their replacements lying ahead, further uncertainty lies ahead before a clear path for the future of the U.S. crypto sector emerges.
Even MicroStrategy’s aggressive buys are no longer enough to give BTC a meaningful boost.
But one small crumb of comfort for Bitcoiners is this: while the past 24 hours may have been painful, altcoins have had it far worse, with many nursing double-digit losses.
The post Why is Bitcoin Down Today — And Will It Last? appeared first on Cryptonews.
