Bitcoin at $109,000 sure seems like a distant memory now.
The world’s biggest cryptocurrency has slumped by 15% over the past month — and is now trading at a 24% discount compared with the all-time high of $109,114.88 set on Donald Trump’s inauguration day.
And as much as the president has played an instrumental role in accelerating BTC’s price over the past year, he’s also been responsible for its undoing.
Remember: this is a digital asset that bears a close correlation to the stock market — and Wall Street is currently in the throes of a massive correction, spurred on by an endless barrage of headlines surrounding Trump’s tariffs.
To put all of this into perspective, the S&P 500 has shed more than $5 trillion in value over the past three weeks. That’s equivalent to Bitcoin’s entire market capitalization… three times over.
Everyday investors are exceedingly nervous, and crypto enthusiasts are twitchy too. Disproportionate sell-offs among altcoins mean some traders say their portfolios are now down by 80% or 90%.
That brings us to our next question: when will crypto go back up?
Putting an exact timing on this is a fool’s errand — the markets are an unpredictable beast — but here are four key factors that could signal a reversal of fortunes.
1. When Interest Rates Are Cut
The U.S. Federal Reserve’s moves on interest rates matter a great deal for BTC. When the cost of borrowing tumbles, investors are likely to seek out riskier assets as they chase returns.
Trump has repeatedly called for Fed chair Jerome Powell to slash rates as a matter of urgency — and berated the central bank when they were left unchanged during their last meeting in January.
But given the Fed operates independently of the government, Powell is under no obligation to succumb to this pressure. He’s repeatedly stressed that he’s not “in a hurry” to do the president’s bidding on this one.
There has been speculation that the Trump administration has been deliberately trying to inflict pain on the U.S. economy to force the Fed’s hand, but interest rate traders still believe a reduction is unlikely in the near term.
According to the CME FedWatch tool, there’s just a 1% chance of a cut when the Federal Open Markets Committee convenes later this week. Meanwhile, 77.1% expect rates to remain unchanged at the following meeting in May. It’s only in mid-June when 57.9% expect a small reduction to a range of between 4% and 4.25%.
Image: CME FedWatch tool
2. When Bitcoin Reserves Gain Momentum
The U.S. has taken the big step of creating a new Bitcoin reserve — but there was disappointment when it was confirmed that no further crypto would be acquired unless this could happen in a “budget-neutral way.”
It’s unclear if and when that might happen. Because of this, it’s worth focusing on the major economies that might follow Trump’s lead. While the British government and the Bank of Korea have confirmed they won’t be emulating this policy, other nations may want to make an allocation for fear of being left behind. If they do, that’ll lead to buying pressure.
3. When the Stock Market Rebounds
In the short term at least, Bitcoin’s fate is tied to the stock market. So the question might not be when crypto will go up… but when Wall Street will.
Fundstrat’s Tom Lee, who’s also a BTC enthusiast, recently predicted that March, April and May could be “huge rally months” where the S&P 500 spikes by 10% to 15% — recovering some lost ground.
His analysis carries weight given how he accurately foresaw how this flagship index would perform in both 2023 and 2024.
An easing of Trump’s heavy-handed rhetoric on trade wars and tariffs will be essential for investor sentiment to improve though — and let’s not forget that there’s the threat of recession on the horizon.
Based on the median of past S&P 500 corrections, the current slump will end in the middle of May — with historical analysis suggesting that most of the 13.6% drop typical in such a reversal has already happened. If this plays out, new all-time highs would be recorded again in September.
But the rules will change if this index ends up in a bear market, which is defined as a 20% drop from all-time highs.
Given the U.S. now has an unpredictable president who doesn’t play by the rules, anything could happen.
The post When Will Crypto Go Back Up? Three Things to Watch appeared first on Cryptonews.
