The recent declines in Bitcoin and other cryptocurrencies can be attributed to a broader selloff in tech stocks and a growing risk-off sentiment across financial markets. Bitcoin, which had been struggling even before the tech market tumble, has been further pressured by the broader market’s downward spiral.
On Thursday, the Nasdaq Composite saw a sharp drop of over 2%, extending a broader decline of around 7% over the past several sessions. A major contributor to the selloff was Nvidia (NVDA), whose earnings report sent shockwaves through the tech sector. Nvidia’s stock dropped by 5% after the company reported fourth-quarter earnings, sparking broader concerns in the chipmaking sector.
The general market downturn has been fueled by a combination of factors, including President Donald Trump’s tariff threats, which have added an extra layer of uncertainty. Trump recently announced plans for punitive tariffs against China, Mexico, and Canada, starting on Tuesday, further weighing on market sentiment.
The Impact on Bitcoin and Crypto
Bitcoin, which had seen some ups and downs in the wake of January’s burst in the speculative memecoin bubble, has faced increased selling pressure over the past several weeks. As the market sentiment turns more cautious, Bitcoin’s price has struggled to gain upward momentum despite some favorable news.
Hedge fund manager Quinn Thompson, founder of Lekker Capital, voiced his concerns over the current market environment. According to Thompson, “Every possible good news item imaginable has come and gone without much upward pressure on price.” He added, “Investors have forgotten that bear markets are possible and what they look like.”
Hedge Fund’s Bitcoin Forecast: $70K by March
Despite the current bearish trends, Thompson remains relatively optimistic about Bitcoin’s future in the short term. His target for Bitcoin is $70,000 by the end of March 2025. This forecast comes amid broader concerns over inflation and risk assets, with Thompson noting that inflation data is “coming in way too hot” for the Federal Reserve to cut rates in the near term. He also pointed out that long-term inflation expectations are “unanchoring to the upside,” which he sees as a red flag for the market.
With Bitcoin and other cryptocurrencies caught in the crosshairs of broader market volatility, investors are left wondering whether the crypto market can weather the storm and regain its footing in the coming months.
Conclusion
The recent tech selloff and the subsequent drop in Bitcoin’s price highlight the broader risk-off sentiment affecting both the stock market and crypto assets. While Bitcoin is facing challenges in the short term, hedge fund manager Quinn Thompson’s prediction of a $70K Bitcoin by the end of March suggests that some investors remain hopeful about the cryptocurrency’s potential to rebound. However, the broader economic factors at play, including inflation and geopolitical tensions, will continue to shape Bitcoin’s price trajectory in the months ahead.
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