The crypto market went into the tailspin for 24 hours before Friday’s sharp recovery, as investors wondered how healthy the economy is and whether a high valuation of dangerous assets would be justified. Despite being sold as a hedge against inflation and the economy, the code traded like a growth stock, causing headwinds in 2025.
As of 2pm, Bitcoin (Cryptography: BTC) It’s flat for the past 24 hours, but previously it’s over 6% and below $80,000. Ethereum (Encryption: ETH) It’s a 4% off, but it fell by 9.7% at noon. and dog coin (Cryptography: Doge) It fell by 12.5% before recovering to a 3.9% loss. This is ahead of normal liquidity weekends, which could result in increased trading volatility.
The last four months of code implementation has been driven by speculation that the new presidential administration will lead to more favorable policies. It happened, but it hasn’t been converted to a higher crypto rating as the buyers speculating on the move have already appeared on the market.
Most cryptocurrencies, including Bitcoin, are either close or below where the US election was held, which results in over purchasing pressure. Investors are focusing on today is a report from the Commerce Department that showed a 0.2% decline in consumer spending despite prices rising 2.6% over a year ago, but revenues have risen by 0.9%.
Consumers spend less on vehicles and other large items while food and housing costs dig into their budgets. This is a clear concern for investors as consumers are driving the economy.
You might think that the crypto market is isolated from the entire economy, but that’s not the case. Cryptocurrency trades in the same way as growth stocks that have been doing big over the past few months.
However, tariffs on imports from Canada, Mexico and China could come into effect next week, with consumers already recovering their spending. That could lead to worsening economic conditions and a decline in money for dangerous assets like cryptocurrencies.
Oddly, the decline in the economy can be crypto before hitting a company with low profits.
The idea that it would come in 2025 was that an improved policy environment would be suitable for cryptocurrency. And while the policy environment has improved, the crypto market has not been actively responding. That’s because there wasn’t enough time for innovation to flourish on blockchain.
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