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Bitcoin faced a significant decline on Monday, falling 4.4% to $100,557.5, as broader market sentiment soured following tariff threats from U.S. President Donald Trump and a hawkish Federal Reserve outlook. The cryptocurrency market also grappled with the lingering ambiguity surrounding Trump’s stance on crypto regulations, adding to the downward pressure.
Market Factors Driving Bitcoin’s Decline
- Regulatory Uncertainty:
- President Trump announced vague plans to draft a regulatory framework for the crypto industry but omitted any mention of Bitcoin in his executive order on digital assets.
- Doubts have emerged over Trump’s ability to fulfill his promise of creating a national Bitcoin reserve, as its establishment may require Congressional approval, likely to face resistance from fiscally conservative lawmakers.
- Trade Tariff Concerns:
- Trump’s tariff threats against Colombia and other economies, including Mexico, Canada, and China, have heightened global market volatility. While Colombia capitulated to Trump’s terms, fears of future trade disruptions weighed on risk assets.
- Federal Reserve Anticipation:
- Markets are bracing for a Federal Reserve meeting expected to maintain interest rates while signaling a hawkish outlook. The anticipation of tighter monetary policy has dampened risk appetite across markets, including equities and cryptocurrencies.
- Equity Market Weakness:
- Losses in technology stocks, driven by the disruptive debut of DeepSeek’s AI offering, spilled over into the crypto market. DeepSeek’s claim of delivering ChatGPT-level performance at lower costs unsettled tech investors, adding to broader market woes.
Altcoins Follow Bitcoin’s Decline
The bearish trend extended to altcoins, with major cryptocurrencies and meme tokens posting sharp losses:
- Ethereum (ETH): Fell 5.8% to $3,148.51.
- XRP: Declined 6.2% to $2.9369.
- Solana (SOL), Cardano (ADA), and Polygon (MATIC): Dropped between 5% and 11%.
- Dogecoin (DOGE): Lost 9.4%.
$TRUMP Token Underperforms
The $TRUMP token, a memecoin launched by President Trump earlier this year, was the worst performer among major altcoins:
- Performance: Dropped 14% on Monday to $26.675, wiping out 60% of its value since its peak of over $60.
- Volatility Impact: The token’s extreme volatility has spilled over into broader crypto markets, souring sentiment toward the sector.
- Ethical Concerns: Critics have raised questions about Trump leveraging his influence to promote and potentially manipulate the token, which has generated billions in paper gains for him.
Outlook for Crypto Markets
The crypto market faces several headwinds, including:
- Uncertainty Over U.S. Regulations: Lack of clarity on Trump’s proposed crypto policies and their feasibility.
- Global Trade Tensions: Potential for increased tariffs to disrupt markets further.
- Hawkish Central Banks: Rising interest rates and tighter monetary policies remain a key challenge for risk assets.
Investors will closely monitor developments around Trump’s regulatory plans and the Federal Reserve meeting this week for further direction in crypto markets.
