Financial Insights That Matter
Cryptocurrencies have been suffering over the past week, with Bitcoin (BTC) retreating sharply from its all-time high attained in the final weeks of December. Several factors have been posing as a barrier to Bitcoin’s northbound journey.
Growing concerns over a potential global trade war, following the announcement of retaliatory tariffs by China and President Donald Trump’s levies on all steel and aluminum exports, have been denting investors’ confidence. Bitcoin fell below $97,000 on Monday. However, the decline is temporary, and the rally is expected to resume once these fears wane and investors get a clearer picture of the Federal Reserve’s plans with its rate cuts.
However, the cryptocurrency’s decline is temporary and the rally is expected to resume once these fears fade. Bitcoin-centric stocks like Robinhood Markets, Inc. HOOD, Interactive Brokers Group, Inc. IBKR, Visa Inc. V and PayPal Holdings, Inc. PYPL would thus be a lucrative buy. These stocks have strong growth potential for 2025. Each of these stocks has seen positive earnings estimate revision in the last 60 days.
Bitcoin was hovering around $96,100 late Monday, a sharp decline from $102,000, which the cryptocurrency maintained over the past month after hitting an all-time high of $106,533 on Dec. 22.
The recent decline is being triggered by fears of a global trade war after Trump, earlier this week, announced his plans to impose tariffs on all steel and aluminum exports. Also, Beijing has already announced retaliatory tariffs after Trump announced 10% tariffs on Chinese imports.
Earlier this month, Trump announced 25% tariffs on all Mexican and Canadian imports before stalling it for a month, following negotiations. These fears have been unsettling the broader market and cryptocurrencies, too, are feeling the heat.
Investors have also been waiting for January’s inflation reading as this could give them a clearer view of how the Federal Reserve plans to go ahead with its rate cut plans. Inflation jumped in the final months of 2024, which saw the Federal Reserve leave interest rates unchanged in January after three consecutive rate cuts totaling 100 basis points.
The surge in inflation has also made experts adjust their forecasts with rate cuts. Market participants were earlier expecting the Fed to resume its rate cuts in March but now believe that the central bank will take a more cautious stance and won’t go for a rate cut before May.
Higher interest rates can impact cryptocurrencies negatively by dampening investors’ interest in riskier assets, increasing the opportunity cost of holding non-yielding assets like Bitcoin, and boosting the U.S. dollar, which typically puts pressure on cryptocurrencies.
#1a73e8;">Boost Your Financial Knowledge and Achieve Stability
Discover a growing online community dedicated to delivering financial news, tips, and strategies designed to help you manage money effectively, save smarter, and grow your investments with confidence.
#1a73e8;">Top Financial Tips for Saving and Investing
- Personal Finance Management: Master the art of budgeting, expense tracking, and building a strong financial foundation.
- Investment Opportunities: Stay updated on market trends, learn about stocks, and explore secure ways to grow your wealth.
- Expert Money-Saving Advice: Access proven techniques to reduce expenses and maximize your financial potential.