Bitcoin is having quite a rough time these. After the flagship cryptocurrency reached $94,000 last week and showing signs of recovery, it went as low as $77,000, now back to $80,000, wiping out $350 billion from the crypto market. Even with some positive developments, like the first-ever crypto summit at the White House and talks about a national Bitcoin reserve, prices continue to fall. So, what’s happening?
Investors Are Looking for Safety
Many big investors are pulling their money out of riskier assets like Bitcoin and putting it into safer options, such as cash. Large companies, including Berkshire Hathaway, are holding onto millions in cash reserves. Even JPMorgan Chase is selling stocks to make sure it has enough cash on hand for uncertain times. These moves put extra pressure on Bitcoin and the crypto market as a whole.
Fears of a Recession Are Growing
Worries about a global recession are making investors nervous. In the coming days, inflation data will be released, which could shake up financial markets. If inflation stays high, central banks might take steps that could slow down the economy even further.
Some analysts think Bitcoin could actually benefit from economic uncertainty. During the COVID-19 crisis, Bitcoin prices dropped at first, but once central banks started printing more money, Bitcoin shot up to new highs. The same thing could happen again if governments respond to a downturn by increasing the money supply.
Wall Street banks are also adjusting their forecasts. JPMorgan now sees a 40% chance of a U.S. recession this year, up from 30% earlier. “We see a material risk that the US falls into recession this year owing to extreme US policies,” analysts wrote, according to The Wall Street Journal. Goldman Sachs has also raised its recession forecast from 15% to 20% and warned that the number could rise if the Trump administration sticks to its current economic policies.
Positive News, but No Impact on Bitcoin Prices
There have been some encouraging developments for Bitcoin. The White House recently hosted its first-ever crypto summit, and there are discussions about creating a national Bitcoin reserve. These steps show that governments are starting to take Bitcoin more seriously. However, this hasn’t helped prices because Bitcoin remains highly volatile, making some investors hesitant to buy in right now.
At time of writing, Bitcoin is trading at $80,250 according to CoinMarketCap data, recovering from a dip to under $77,000 just 5 hours ago.