Bitcoin's Bearish Trend Deepens Amidst Macro Uncertainty

Bitcoin's recent performance has been marked by a shift towards a bearish trend, with market sentiment heavily influenced by macroeconomic factors, according to analysts. The cryptocurrency's weekend gains were completely erased, and while Trump's statement on cryptocurrency reserves briefly halted the downward momentum, underlying macroeconomic issues persist.

Over the past few days, Bitcoin's price has exhibited significant volatility. Trump's statement may have only temporarily addressed a serious issue, as the cryptocurrency fear and greed index dropped to its lowest level since 2022 last week. Several factors contribute to Bitcoin's current bearish stance. Firstly, the macroeconomic situation is not favorable for cryptocurrencies. The Atlanta Fed's GDPNow model now predicts that the U.S. GDP will contract by 2.8% by the end of the first quarter of 2025, a stark contrast to the 3.9% growth predicted four weeks ago.

Another significant factor is Trump's proposed tariff policy. Although some analysts believe that tariffs are not a major reason for the cryptocurrency market's decline, when Trump recently announced a 25% tariff on the European Union, the market experienced a sharp drop. This indicates that macroeconomic factors largely influence the market sentiment of the cryptocurrency industry.

Since the approval of the spot Bitcoin ETF, cryptocurrency has become deeply integrated with traditional finance. If the U.S. economy falls into a recession, the drawbacks of this integration will be fully revealed. As a result, investors should closely monitor macroeconomic developments and their potential impact on the cryptocurrency market.