Bitcoin Dips Below $116,000 Amid Trump’s Crypto Stance and Fed Concerns
Bitcoin (BTC) experienced a slight downturn, trading below $116,000 on Wednesday afternoon. This represents a 1.4% decrease over the past 24 hours. Several factors contributed to this dip, including Donald Trump’s recent statements on the cryptocurrency sector and the latest Federal Reserve (Fed) meeting.
Trump’s Focus on Tokenization
Trump’s communication primarily addressed broader market aspects such as tokenization and stablecoin issuance. Notably, he did not mention the country’s strategic Bitcoin reserve.
Fed Holds Steady, Powell’s Words Weigh on Market
As anticipated, the U.S. central bank decided to maintain the interest rate. Furthermore, comments from Fed Chair Jerome Powell failed to inspire confidence in the market, leading to expectations of fewer rate cuts in 2025.
Trump and Powell’s Impact on Bitcoin
Trump and Powell had previously discussed the Fed’s substantial spending on building renovations.
On Wednesday, both figures made separate but significant announcements that influenced the market.
Trump released a set of recommendations for U.S. regulators aimed at “strengthening American leadership in digital financial technology.”
“INAUGURATING THE GOLDEN ERA OF CRYPTOCURRENCIES.”
Trump urged Congress to enact legislation that “eliminates existing regulatory gaps by granting the CFTC authority to oversee spot markets for digital assets that are not securities” and to “embrace DeFi technology and recognize the potential to integrate it into traditional finance.”
He also recommended that the SEC and CFTC “immediately allow the trading of digital assets at the federal level, providing clarity to market participants on issues such as registration, custody, trading, and record keeping,” and “allow innovative financial products to reach consumers without bureaucratic delays, through tools such as safe zones and regulatory test environments.”
Other points included regulatory clarity on permitted banking activities related to custody, tokenization, stablecoin issuance, and blockchain use, as well as transparency in obtaining licenses.
Trump also suggested that the IRS reduce taxes on cryptocurrency gains, mining, and staking.
Despite the positive aspects of these recommendations, some market participants were disappointed by the lack of any mention of a U.S. strategic Bitcoin reserve.
Fed’s Inaction and Powell’s Statements Shake the Market
The Fed announced it would hold interest rates steady between 4.25% and 4.5% until the next meeting. The central bank reiterated its goal of achieving 2% inflation while maintaining maximum employment.
The market largely anticipated this decision. However, many now foresee fewer rate cuts in 2025 than initially expected.
Powell addressed the importance of the Fed’s independence and discussed current issues, including Trump’s tariffs.
“Higher tariffs have begun to be reflected more clearly in the prices of some goods, but their overall effects on inflation and the economy still need to be observed,” Powell stated. “Their effects on inflation may be short-lived, but it is possible that these effects will be more persistent.”
These statements suggest that the Fed is prepared to maintain current interest rates for an extended period, contributing to Bitcoin’s decline below $116,000 on Wednesday.
The current dip is considered minor, and the market anticipates Bitcoin to fluctuate between $112,000 and $120,000 until a new trend emerges.
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