Market Analysis: Bitcoin's Biggest Loss Since August Signals Caution
Andre Dragosch, Bitwise's Europe Head of Research, suggests Bitcoin may remain under pressure in the coming weeks following its recent 8.8% decline. The drop to nearly $95,000 marks Bitcoin's largest percentage loss since August, according to TradingView and CoinDesk Indices data.
Key Factors Behind the Decline
- Federal Reserve Policy: Hawkish rate projections signaled fewer cuts for 2025, tightening financial conditions.
- Market Sentiment: Traditional markets also felt the strain, with the S&P 500 dropping 2% and the dollar index climbing to October 2022 highs.
- Treasury Yields: The 10-year yield rose 14 basis points, reflecting increased risk aversion.
Dragosch notes, "The Fed is stuck between a rock and a hard place—financial conditions tighten despite rate cuts, while inflation indicators re-accelerate."
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Long-Term Outlook: A "Buy the Dip" Opportunity?
Despite short-term risks, Dragosch highlights Bitcoin's supply deficit as a tailwind. He previously predicted July's rally from $50,000 to $100,000, emphasizing BTC's resilience.
"Expect more pain over the coming weeks, but this could be an interesting buying opportunity," he advises.
Inflation Parallels to the 1970s
Dragosch draws attention to concerns over a potential "double hump" inflation scenario reminiscent of the 1970s, where secondary waves outpaced initial spikes. The Fed's caution may delay aggressive rate cuts, risking economic slowdowns.
FAQs
Q1: Why did Bitcoin drop 8% recently?
A: The decline followed the Fed's hawkish policy shift and broader risk-off sentiment in traditional markets.
Q2: Is now a good time to buy Bitcoin?
A: Experts suggest short-term volatility but long-term potential due to BTC's limited supply.
Q3: How does inflation impact Bitcoin?
A: Rising inflation may pressure the Fed to act, potentially affecting BTC's appeal as a hedge.
Q4: What’s the Fed’s stance on Bitcoin?
A: The Fed prohibits holding BTC and shows no intent to change regulations.
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Key Takeaways
- Bitcoin’s drop reflects macro uncertainties; further declines possible.
- Inflation fears and Fed policy remain critical watchpoints.
- Supply scarcity supports long-term BTC bullishness.
By Omkar Godbole | Markets Analyst | CMT Certified
Disclaimer: The author holds minor positions in BTC, ETH, and other cryptocurrencies.
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