Investors are suffering huge losses as Bitcoin (BTC) and altcoins struggle to combat steep declines.
While investors in leveraged transactions have lost billions of dollars, the decline is due to increasing fears about tariff wars, economic uncertainty, the decreasing possibility of the Fed cutting interest rates and increasing concerns about a possible recession.
While these factors reduced the risk appetite in the market, analysts evaluated the recent decline and the possibility of an increase.
Speaking to Coindesk, LVRG Research Director Nick Ruck said investors are taking a risk-averse approach as the probability of the Fed cutting interest rates decreases and the February CPI report is expected to come in a similar format to January.
Ruck said that for the increase, the economic outlook needs to become clearer and the possibility of a rate cut needs to increase, adding, “Investors can balance and set aside the risk in their portfolios until the economic situation in the US becomes clearer and the need for a rate cut becomes stronger, which could happen towards the end of this year.”
Weakening US Dollar Positive for Bitcoin!
Singapore-based crypto trading firm QCP Capital said in its latest analysis that despite the recent decline in Bitcoin (BTC), not all signals point to a bearish reversal.
Noting that BTC is showing signs of recovery despite falling below $80,000, analysts said that the weakening US dollar and the nearly 60 basis point drop in 10-year US Treasury yields are two positive catalysts for US stocks and cryptocurrency markets.
“On March 10, the S&P 500 and Nasdaq indexes fell 2.7% and 3.8%, respectively. The Magnificent 7 lost more than $830 billion, marking the biggest single-day loss in history for these names.
Moreover, trading volumes of US equity put options have also skyrocketed to their highest level since 2020, suggesting that the downtrend is now in full swing.
Notably, US President Donald Trump’s recent comments about a possible economic recession have worsened market sentiment towards risky assets, causing BTC to drop below $80,000.
“But despite the market turmoil, not all signals are bearish. This latest wave of declines has lowered 10-year Treasury yields by about 60 basis points and weakened the U.S. dollar. These are historically positive factors for USD-denominated risk assets like U.S. equities and crypto.”
*This is not investment advice.