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Washington’s Policy Shift May Inject Fresh Momentum into Bitcoin
Global Markets Suffering from Risk Aversion
Bitcoin’s sharp pullback is deepening as risk aversion grips global markets. The digital asset is now trading near $81,600, down 25% from its January peak of $109,000, with selling pressure intensifying as liquidity conditions tighten, according to CoinGecko.
U.S. Government Seeking to Expand Bitcoin Holdings
The U.S. government is reportedly seeking to expand its Bitcoin holdings, a move that, if executed, could alter the supply dynamics of an already tightening market. This policy shift has sparked hope among investors, who are eager to see a reversal of the current market trend.
Crypto Investors Need a Real Shift in Macro Conditions to Turn Sentiment Around
"Daily tariff swings and ongoing ETF outflows are keeping risk assets under pressure," said Vincent Liu, Chief Investment Officer at Kronos Research. "Crypto investors need a real shift in macro conditions to turn sentiment around."
Key Inflection Point Reached
Data from Glassnode shows that Bitcoin’s recent slide below $92,000 marked a key inflection point. The level corresponds with the Short-Term Holder cost basis – a critical support line that, when breached, often signals a shift in market sentiment.
Lack of Aggressive Dip-Buying
Traders have taken note of what is missing from this drawdown: aggressive dip-buying. Unlike previous pullbacks that sparked renewed accumulation, this time, investors have largely stepped aside.
Crypto Balance Distribution Heatmap
According to Glassnode’s Crypto Balance Distribution heatmap, demand has softened as external risks – including the Bybit hack and escalating U.S. tariff disputes – have driven capital preservation over opportunistic buying.
Broader Macro Backdrop
The broader macro backdrop isn’t helping risk sentiment either. The ASX 200 has slipped into correction territory, now 10% off its February peak, while inflation concerns and U.S. Federal Reserve hawkishness have kept traditional markets under pressure.
Fresh Trade Tensions
Investors are also contending with fresh trade tensions between the U.S. and China. However, headlines stemming from the White House are offering crypto investors some hope.
White House’s Commitment to Accumulate Bitcoin
At a closed-door roundtable earlier this week, White House official Bo Hines told crypto industry leaders that the Trump administration intends to accumulate as much Bitcoin as possible, reinforcing the government’s recent Bitcoin reserve announcement.
Senator’s Bill to Acquire Up to One Million BTC
It also 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.
White House Support for Enshrining the Reserve into Law
The White House has signaled support for enshrining the reserve into law, though it remains unclear how the purchases would be executed beyond what’s already been announced.
Budget-Neutral Acquisitions
Administration officials insist acquisitions will be "budget-neutral," potentially relying on revalued gold certificates at the Federal Reserve to finance the plan.
Potential Fundamental Catalyst
If Washington moves forward with large-scale purchases, supply constraints may emerge, adding a fundamental catalyst for future price appreciation.
Bitcoin’s Futures Remain in Contango
"Bitcoin’s futures remain in contango, suggesting relative strength in Bitcoin amid broader market uncertainty," said Alexia Theodorou, Kraken’s head of derivatives.
Rising Bitcoin Dominance Ratio
"The rising Bitcoin dominance ratio further indicates that some investors may be rotating capital out of altcoins and into Bitcoin as a safe haven," he added.
Prolonged Consolidation or Deeper Correction
Still, without renewed buying interest, Bitcoin could enter a prolonged consolidation or deeper correction before stabilizing, Glassnode wrote.
Major Macro Concern
"Whether the two priced-in potential rate cuts will happen this year is a major macro concern," said Marco Lim, managing director at Solowin Holdings and founding partner of MaiCapital. "Although 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."
Conclusion
The potential shift in U.S. policy towards Bitcoin could inject fresh momentum into the digital asset, providing a fundamental catalyst for future price appreciation. However, the market remains cautious, with investors waiting for a real shift in macro conditions to turn sentiment around.
FAQs
Q: What is the current price of Bitcoin?
A: The current price of Bitcoin is around $81,600.
Q: What is the U.S. government’s stance on Bitcoin?
A: The U.S. government is reportedly seeking to expand its Bitcoin holdings, with a potential shift in policy that could alter the supply dynamics of an already tightening market.
Q: What is the current state of global markets?
A: Global markets are suffering from risk aversion, with the ASX 200 slipping into correction territory and traditional markets under pressure due to inflation concerns and U.S. Federal Reserve hawkishness.
Q: What is the impact of the White House’s commitment to accumulate Bitcoin?
A: The White House’s commitment to accumulate as much Bitcoin as possible has provided some hope for crypto investors, with potential implications for the supply dynamics of the digital asset.
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