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The OG cryptocurrency Bitcoin is having a horrible month.
The token has wiped out hundreds of billions of dollars in total market value, dropping below $92,000 for the first time since mid-April. That’s despite soaring to an all-time high of over $126,000 a mere six weeks ago.
It’s been a bruising couple of weeks — and nobody is entirely clear on why.
Even Bloomberg admitted that “Bitcoin has fallen fast, hard, and with no clear trigger.”
One prevailing theory is economic uncertainty over dwindling hope that the US Federal Reserve will lower interest rates next month. A lower rate usually leads to increased liquidity and more willingness to invest in more risky assets, like crypto.
“The general market is risk-off,” Bitwise Asset Management chief investment officer Matthew Hougan told Bloomberg. “Crypto was the canary in the coal mine for that, it was the first to flinch.”
Experts say it’s likely that there are several factors at play.
“The selloff is a confluence of profit-taking by [long-term holders], institutional outflows, macro uncertainty, and leveraged longs getting wiped out,” Nansen senior research analyst Jake Kennis told Bloomberg. “What is clear is that the market has temporarily chosen a downward direction after a long period of consolidation/ranging.”
The fall has led investors to question the long-held assumption that Bitcoin was a hedge against inflation, as NBC News reports, with the digital currency’s crash accompanying — not defying — a larger sell-off in the buzzy-but-tenuous AI market.
Complicating matters is the government shutdown in the US, which recently ended, but has caused important economic data releases, including job and inflation reports, to be delayed.
Analysts are worried Bitcoin could continue its already steep slide.
“We have to be honest: this correction may not be finished… if equities roll over we could easily retest the low $70Ks, maybe briefly below,” digital asset solutions company Hex Trust CEO Alessio Quaglini told NBC.
The latest crash has defied president Donald Trump’s wholehearted embrace of the crypto community, allowing it to make major gains over this year. The White House has pursued the deregulation of crypto, while establishing legal frameworks for stablecoins. The Trump administration has also suggested the establishment of a strategic Bitcoin reserve.
But despite all that enthusiasm, Trump may have found a much bigger enemy in the form of escalating economic uncertainty that’s scaring investors away from highly volatile assets, largely as a result of his own actions.
More on Bitcoin: Bitcoin Is Suddenly Crashing Pretty Hard
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