Bitcoin News Today: Bitcoin’s Fate Hinges on Fed Moves and a $6.6 Trillion Stablecoin Loophole

Bitcoin's recent price correction has reignited concerns over the potential for a deeper market downturn, with analysts closely monitoring key macroeconomic and regulatory developments. The cryptocurrency reached an all-time high of $124,000 in early August but has since fallen to approximately $115,000, triggering a broader decline in the total market capitalization of cryptocurrencies to $3.88 trillion—its lowest level in over two weeks. Ethereum and XRP have also seen double-digit declines, amplifying fears of a broader market correction.

The pullback has coincided with a shift in sentiment reflected in the crypto fear and greed index, which fell to 56 from 68 the previous week, nearing the “fear” threshold. Analysts have noted that while some of the decline could be attributed to profit-taking following a rapid rally in the first two weeks of August, the magnitude of the drop raises the possibility of a more sustained sell-off. “Bitcoin continues to pull back from its recent peak, with Ethereum under heavier selling pressure,” said David Morrison, senior market analyst at Trade Nation, highlighting the sector’s volatility.

The market’s downward movement has emerged amid significant developments in the stablecoin sector, particularly around the recently passed Genius Act. U.S. banking groups, including JPMorgan and Bank of America, have raised concerns that a loophole in the legislation could allow stablecoin issuers to offer yields, potentially triggering a $6.6 trillion outflow of deposits from traditional banks. This risk has prompted a joint plea from major industry associations to Congress to close the loophole and preserve the stability of the financial system.

At the same time, the market is bracing for potential comments from Federal Reserve Chair Jerome Powell at the upcoming Jackson Hole economic policy symposium. Analysts suggest that the tone and timing of any rate cuts could have a material impact on Bitcoin’s price in the near term. Treasury Secretary Scott Bessent recently indicated that a 50 basis point rate cut could occur in September, echoing a move that previously supported a surge in Bitcoin prices ahead of the November election. However, a more cautious approach from the Fed could tighten financial conditions and exacerbate downward pressure on crypto assets.

Carolane de Palmas, a market analyst at Activtrades, emphasized that Bitcoin’s short-term performance remains sensitive to liquidity cycles, with Fed policy playing a critical role in shaping investor flows. “If Powell signals a slower path to easing, we could see reduced momentum in the crypto space through the fall,” she noted. “However, if the Fed reaffirms its commitment to rate cuts, it could restore confidence and reinvigorate the rally.”

Looking ahead, the coming weeks will be pivotal in determining Bitcoin’s trajectory. A sustained drop below the $112,000 level could confirm a deeper correction, with some analysts suggesting a potential decline to between $105,000 and $107,000. The convergence of regulatory uncertainty, macroeconomic signals, and market volatility means that Bitcoin’s path in the next quarter will be closely tied to developments in the broader financial landscape.

Source:

[1] Wall Street Issues Serious $6.6 Trillion Crypto Warning As Price Crash Fears Hit Bitcoin, Ethereum and XRP (https://www.forbes.com/sites/digital-assets/2025/08/18/wall-street-issues-serious-66-trillion-crypto-warning-as-price-crash-fears-hit-bitcoin-ethereum-and-xrp/)

[2] The 3 Biggest Bitcoin Crashes in History — and How to Spot the Next One (https://finance.yahoo.com/news/3-biggest-bitcoin-crashes-history-164107120.html)

[3] Bitcoin Price Crash Fears Gather As Crypto Braces For A ... (https://www.forbes.com/sites/digital-assets/2025/08/19/wall-street-issues-serious-66-trillion-crypto-warning-as-price-crash-fears-hit-bitcoin-ethereum-and-xrp/)