Bitcoin Drops 4% After Trump's Remarks, Fed Policy Boosts Stability

Bitcoin's price experienced a period of stability near $85,000, bolstered by the return of the Coinbase Premium and positive remarks from the Federal Reserve and President Trump. The cryptocurrency initially surged to an intraday high of $87,453 during the early hours of the New York trading session but quickly retraced to $83,655 following a video statement by President Trump at the Digital Asset Summit in New York.

Prior to Trump's appearance, rumors circulated on social media suggesting that he might announce zero capital gains taxes on certain cryptocurrencies or issue a favorable statement about the US strategic Bitcoin reserve. However, these rumors were not substantiated. Trump reiterated his commitment not to sell confiscated Bitcoin and called for Congress to enact clear stablecoin legislation promptly. His most optimistic statement was his reiteration of the goal to make the US the global leader in cryptocurrency.

Traders, who had anticipated a more favorable executive order from Trump, sold off their positions once it became clear that his statements were not as pro-Bitcoin as hoped. Chartered market technician Aksel Kibar noted that there is still a possibility of Bitcoin's price correcting to $73,700, stating that the long-term chart of BTC/USD still indicates a pullback to the broken $73,700 level. The subsequent price action over the next several months will be crucial in determining the future trajectory of Bitcoin's price.

Bitcoin's recent strength is not solely attributed to Trump's statement. On March 19, Bitcoin responded positively to the release of the Federal Open Market Committee (FOMC) minutes and Federal Reserve Chair Jerome Powell's confirmation that the Fed's quantitative tightening regime would slow down. Powell also hinted at the possibility of two interest rate cuts in 2025. BitMEX co-founder Arthur Hayes described this as the Fed's admission that quantitative tightening would essentially end on April 1. However, he cautioned that while $77,000 might have been the bottom for Bitcoin, surprise volatility could lead to further pain in both stocks and Bitcoin. Hayes advised traders to stay nimble and cash-rich.

The reappearance of the Bitcoin Coinbase premium suggests that spot demand is returning to the market, indicating a shift from futures-driven price action to more organic market demand. This development is seen as a positive sign for Bitcoin's long-term prospects, as it reflects growing interest and investment in the cryptocurrency beyond speculative trading.