The cryptocurrency market is losing billions of dollars. One of the reasons is Donald Trump's politics
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The cryptocurrency market is losing over a trillion dollars
Analysts indicate that sudden declines are intensified by the liquidation of highly leveraged positions, the scale of which has been growing exponentially in recent weeks. The declines represent a complete reversal of the trend that dominated just a few months ago, when the market was breaking records after President Donald Trump's declaration of making the US a “bitcoin superpower” and after the appointment of the head of the Securities and Exchange Commission, who is favorable to cryptocurrencies.
Uncertainty around the Fed's decisions and the valuation of technology companies
Growing doubts about the actions of the Federal Reserve also contributed to the deterioration of the mood. Investors are increasingly concerned that the Fed will not decide to cut interest rates at its December meeting. The central bank reduced them this year by 0.5 percentage points, however, the decreasing chances of another reduction have increased pressure on all risky assets, including cryptocurrencies.
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Higher interest rates do short-term US bonds more attractive, while weakening the demand for digital tokens, which for many investors are an alternative to traditional instruments. Doubts about monetary policy overlap with concerns about the overvaluation of Silicon Valley technology giants, driven by the investment boom in artificial intelligence. Effect? A decline not only on the crypto market, but also on stock exchanges – the S&P 500 index lost about 3%. since the record close on October 28.
Donald Trump's policy is killing the cryptocurrency market
The most dramatic day of the current correction was October 10. It was then that President Donald Trump threatened to impose “massive” tariffs on China, which triggered a wave of panic selling in the cryptocurrency market. According to data from the Coinbase platform, $20 billion was liquidated in one day. highly leveraged positions – the highest number in the history of market monitoring. The forced closure of plants combined with a sharp decline in liquidity deepened the depreciation and dragged down the valuations of almost all tokens.
US President Donald Trump
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Experts emphasize that Despite the previous wave of optimism – fueled by regulatory signals from the White House and declarations supporting the development of digital assets – the cryptocurrency market remained extremely vulnerable to external shocks. The current sell-off shows how much of the previous increases were based on speculative capital reacting instantly to changes in market sentiment.
Cryptocurrencies are once again at a turning point, and the upcoming decisions of the Fed and the White House may determine whether the market will rebound after a deep correction or plunge into a longer downward phase.
