Financial Insights That Matter
The cryptocurrency market didn’t have a great first quarter after a stellar 2024. Bitcoin (BTC), the world’s most popular cryptocurrency, has seen a steep decline in the past month, with its price retreating sharply from its all-time high by more than 25%.
Rising inflation, coupled with President Donald Trump’s proposed tariffs on several trading partners of the United States, has raised fears of taking a massive toll on the economy’s health. The fears of a recession have seen investors rushing to safe-haven stocks lately. However, Bitcoin still has a lot of potential and once the ongoing trade tensions ease and inflation cools, the cryptocurrency will resume its rally.
Given this scenario, it would be ideal to adopt the buy-the-dip approach. It would thus be ideal to add bitcoin-centric stocks like NVIDIA Corporation NVDA, Interactive Brokers Group, Inc. IBKR and Robinhood Markets, Inc. HOOD to your portfolio. Each of these stocks has strong growth potential for 2025 and has seen positive earnings estimate revisions in the last 60 days.
Bitcoin has given up almost all the gains it made immediately after Trump’s victory in the Presidential election. The cryptocurrency hit an all-time high of $106,533 on Dec. 22. However, it has since failed to hold on to the momentum. Bitcoin has retreated sharply over the past month and was hovering around $83750 on Monday.
The decline comes as fears of a trade war continue to escalate following Trump’s announcement of hefty tariffs on several countries. The President last week announced 25% tariffs on all imported cars and light trucks, which go into effect on April.
Also, Trump has already announced 25% reciprocal tariffs on imports from Canada and Mexico, which will also go into effect on Wednesday. Besides, a 10% tariff on Chinese goods is already in place.
However, Trump also said last week that the tariffs will be flexible and narrower in scope and he may give some countries a break from the reciprocal tariffs. Also, sector-specific tariffs could be delayed further. This has eased some of the fears but investors are yet to get a clearer picture of how the situation will shape up in the near term.
The Bitcoin rally in the final quarter of 2024 was also largely triggered by the decline in inflation as the Federal Reserve started its easing cycle with a 100-basis-point rate cut between September and December.
However, the Fed has since paused its rate cuts after inflation showed signs of increasing. The Federal Reserve has since adopted a cautious approach and is unlikely to go for a rate cut before the second half of the year.
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