Crypto Cracks Late in Day, Bitcoin Slumps Below $106K
Crypto markets experienced a significant downturn on Thursday, with Bitcoin (BTC) falling over 2.5% to $105,900 and altcoins such as Ether (ETH), Solana (SOL), XRP, and Dogecoin (DOGE) experiencing even steeper declines of 5-7%. This broader selloff in risk assets coincided with escalating geopolitical tensions and economic uncertainties.
President Trump’s renewed threats of tariffs, coupled with the stalled Iran nuclear negotiations and the potential for Israeli military action against Iranian nuclear sites, fueled investor anxieties. Trump explicitly warned of a potential conflict, advising Americans in the region to evacuate. While US stocks managed to close with modest gains, the crypto market was unable to withstand the negative sentiment.
The recent rally in risk assets, including cryptocurrencies, has occurred despite the Federal Reserve’s commitment to maintaining its tight monetary policy. However, weakening economic data may force a shift in the Fed’s stance. Thursday’s economic reports revealed softer-than-expected Producer Price Index (PPI) figures and a rise in initial jobless claims to a multi-month high of 248,000, indicating a slowdown in employment growth and weaker inflation. Continuing jobless claims also reached their highest level since November 2021 at 1.956 million.
These economic indicators add weight to President Trump’s criticism of Fed Chair Jerome Powell’s monetary policy, calling Powell a “numbskull” for not cutting interest rates and threatening to intervene. Despite Trump’s criticism and threats, Powell’s term extends until 2026, and Trump previously stated that dismissing him beforehand was not an option. The interplay of geopolitical risks and softening economic data created a perfect storm for the cryptocurrency market downturn. The situation highlights the sensitivity of crypto markets to both global events and domestic economic policy. Investors are closely watching the evolving economic landscape and geopolitical developments for clues about the market’s future direction.
