The cryptocurrency market has recently experienced a significant decline, driven by a combination of macroeconomic factors, political decisions, and events within the industry itself. The main reasons for the current drop include:
1. Introduction of new trade tariffs in the US: President Donald Trump announced a 25% tariff on imports from Mexico, Canada, and China. These measures heightened concerns about inflation and led to a withdrawal of investors from risky assets, including cryptocurrencies.
2. Tight monetary policy of the Federal Reserve (Fed): Rising inflation in the US and strong labor market indicators have reduced the likelihood of an imminent easing of Fed policy. This strengthens the dollar and makes traditional investment instruments more attractive compared to volatile assets like Bitcoin.
3. Correlation with the stock market: The decline of the S&P 500 and Nasdaq indices puts pressure on Bitcoin, which often moves in unison with these indices. Investors tend to flee riskier assets during periods of market instability.
4. Incidents in the crypto industry: The hacking of the Bybit exchange, resulting in the theft of about $1.5 billion, undermined investor trust and triggered a mass withdrawal of funds from the platform.
5. Capital outflow from cryptocurrency funds: Spot Bitcoin ETFs have recorded several weeks of net capital outflow, indicating a decline in interest from institutional investors in cryptocurrencies.
These factors combined create an unfavorable environment for the cryptocurrency market, causing price declines and increased volatility.
