Bitcoin Plummets 25% Amid Global Risk Aversion, White House Plans Major Purchase

Bitcoin has experienced a significant decline, with its value dropping to around $81,600, marking a 25% decrease from its January peak of $109,000. This downturn is attributed to heightened risk aversion in global markets and tightening liquidity conditions. The crypto market has been under pressure due to daily tariff swings and ongoing ETF outflows, which have kept risk assets under strain.

Investors are cautious, and there has been a notable absence of aggressive dip-buying, which typically sparks renewed accumulation during previous pullbacks. Instead, external risks such as the Bybit hack and escalating U.S. tariff disputes have driven capital preservation over opportunistic buying. The broader macro backdrop, including inflation concerns and hawkishness from the U.S. Federal Reserve, has also contributed to the risk-averse sentiment.

Despite the challenging environment, there is a glimmer of hope for crypto investors. The White House has indicated its intention to accumulate as much Bitcoin as possible, reinforcing the government’s commitment to its recent Bitcoin reserve announcement. This move, if executed, could alter the supply dynamics of an already tightening market.

At a closed-door roundtable, White House official Bo Hines informed crypto industry leaders of the administration's plans to accumulate Bitcoin. This comes as Senator Cynthia Lummis reintroduces the Bitcoin Act, a bill that would require the U.S. government to acquire up to one million BTC, worth roughly $80 billion at current prices. The White House has signaled support for enshrining the reserve into law, though the details of how the purchases would be executed remain unclear.

Administration officials have stated that acquisitions will be "budget neutral," potentially relying on revalued gold certificates at the Federal Reserve to finance the plan. If Washington proceeds with large-scale purchases, supply constraints may emerge, providing a fundamental catalyst for future price appreciation.

Bitcoin’s futures remain in contango, suggesting relative strength in Bitcoin amid broader market uncertainty. The rising Bitcoin dominance ratio indicates that some investors may be rotating capital out of altcoins and into Bitcoin as a safe haven. However, without renewed buying interest, Bitcoin could enter a prolonged consolidation or deeper correction before stabilizing.

The potential rate cuts and their impact on the market are major macro concerns. Although the Consumer Price Index (CPI) came in better than expected, leading to a bounce in crypto and U.S. equities, most of Trump's impact on crypto seems to have already been priced in. The market awaits further developments and clarity on the government's Bitcoin acquisition plans, which could inject fresh momentum into the digital asset.