Analysts Predict Further Decline in Crypto Market Amid Political Uncertainty

Crypto investors are disheartened by the lack of progress in establishing a U.S. bitcoin reserve, while Donald Trump’s statements on tariffs raise concerns. Industry experts have reached these conclusions.

Anthony Scaramucci, head of SkyBridge Capital, noted that Trump’s unpredictable behavior will lead to short-term “turbulence” in the market, but in the long run, bitcoin and cryptocurrencies in general will emerge as “winners.”

According to trader and Fidenza Macro newsletter author Geo Chen, in anticipation of “trade wars,” market participants will avoid risks. Many crypto assets may lose up to 50% of their value compared to January highs, but recovery will follow later.

“Ultimately, [tariffs] will be reduced (but not to zero), and the market will ‘digest’ them and recover (as it did in 2018). Cryptocurrency will rebound, as we are not yet at the end of the bull cycle,” emphasized Chen.

Analysts at QCP noted that the recent press conference by “crypto czar” David Sachs disappointed market participants. The experts described the development of cryptocurrency legislation and the prospect of forming a U.S. bitcoin reserve as long-term positive factors. However, they also pointed to short-term challenges for digital gold:

“Bitcoin remains resilient, but geopolitical risks and the lack of crypto-specific catalysts make markets fragile. Given the large liquidations earlier this week, expect continued volatility. Risk management is key.”

Bitwise portfolio manager Jeff Park believes that the goal of Trump’s tariff policy is to weaken the dollar without increasing long-term interest rates. In his view, the high cost and demand for the dollar in the global market “forces the U.S. to have a constant trade deficit to supply the world with dollars.”

“One way to achieve this is to force countries to reduce their dollar reserves while extending the maturity of their treasury debt. This would suppress long-term interest rates while supporting the U.S. manufacturing base,” noted Park.

He added that the subsequent weakening of the economy will lead to the issuance of additional money supply by U.S. authorities, which “has always been a good incentive” for the first cryptocurrency.

Back in February, analyst and MN Trading founder Michaël van de Poppe predicted high volatility in the bitcoin market and pointed to a possible ATH within a month.