Bitcoin slid to a two-month low on Friday as bets that the next US Federal Reserve chair could adopt a tighter liquidity stance weighed on cryptocurrencies and pushed the dollar higher.
Bitcoin was down 2.5% on Friday at around $82,300, adding to the prior session’s losses and on track for a fourth consecutive monthly decline—its longest losing streak in eight years.
Other cryptos like Ether also slid to a two-month low, trading 2.9% lower at $2,735.48.
Cryptocurrencies have lacked clear momentum since last year’s sell-off and have lagged the strong rallies seen in gold and equities, which they had at times moved in tandem with, according to analysts.
“Bitcoin trading above the $81,000 level reflects a broader phase of consolidation across the crypto market, with Ethereum and XRP also seeing muted momentum in the near term. Ethereum continues to find support from sustained on-chain activity and institutional interest, while developments around Ripple and XRP remain closely watched by the market,” said Avinash Shekhar, Co-Founder and CEO, Pi42.
What’s behind the plunge?
According to a Reuters report, the crypto market has struggled despite earlier hopes of strong inflows and a more supportive regulatory environment under President Donald Trump.
The decline followed a broader global risk-off move triggered by weak tech earnings and a sudden pullback in gold and silver after both hit record highs. Analysts believe that the drop was driven mainly by futures deleveraging, not sustained spot selling.
Selling pressure intensified amid growing speculation that former Federal Reserve Governor Kevin Warsh could be named by Donald Trump as the successor to Fed Chair Jerome Powell.
Warsh has advocated a major shift in the central bank’s approach, including a push for a leaner Fed balance sheet. Cryptocurrencies such as Bitcoin have typically benefited from an expansive balance sheet, often rallying when the Fed injects liquidity into money markets—a backdrop that supports riskier, speculative assets, according to a Reuters report.
“Uncertainty around Fed chairmanship has stirred speculations of a more hawkish outcome than some had hoped for, pushing investors into a risk-off mindset and adding pressure on crypto prices,” said Nischal Shetty, Founder, WazirX.
What should investors do?
Avinash Shekhar of Pi42 recommended investors focus on staggered allocations amid heightened volatility in the crypto market.
“Investors should focus on staggered allocations, avoid overleveraged positions, and use this phase to reassess portfolio balance rather than reacting emotionally to short-term price swings,” Shekhar said.
Speaking on the technical outlook, Riya Sehgal, Research Analyst, Delta Exchange, said, “ Short-term momentum stays bearish. If BTC and ETH hold key supports near $80,000 and $2,700, the market may stabilise as volatility cools.”
(With inputs from Reuters)
Disclaimer: This story is for educational purposes only. The views and recommendations above are those of individual analysts or broking companies, not Mint. We advise investors to check with certified experts before making any investment decisions.
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