What is causing the pullback in the cryptocurrency market?

Source: CritpoTendencia Original Title: What Is Causing the Cryptocurrency Market Pullback? Original Link: In recent hours, Bitcoin’s price has experienced a sharp shake that has pushed it into the $88k per coin zone. The mass sell-off situation is not limited to Bitcoin or the main digital assets but affects the entire cryptocurrency market. Virtually, capital from all sectors is retreating amid a problematic outlook.

In a recent report by Ned Davis, cited by CNBC, it is stated that the source of all problems is one: Donald Trump. The domestic and foreign policies of the Republican administration become an omnipresent factor affecting all markets. Hence, elements such as tariffs, international law, commodity markets, stocks, and cryptocurrencies have a single source.

Meanwhile, all of this is complemented by the internal dynamics in which the executive exerts strong pressure against the Federal Reserve. Confrontation at all levels creates an environment unsuitable for a favorable capital flow into equity assets. Even Treasury bonds are experiencing a significant demand drought as a result of this same context.

As can be seen, the cryptocurrency market is under pressure from all sides, which is reflected in the sharp decline of recent days. According to data from CoinMarketCap, the total crypto universe’s market capitalization has retreated by 2.22% in 24 hours. With this, the chances of losing the $3 trillion barrier again are enormous.

What does the short-term future hold for the cryptocurrency market?

Although the problems for the crypto world seem to be everywhere, and indeed they are, there is also room for optimism. The fact that the difficult context stems from a single cause suggests that a small change in Trump’s behavior could improve the outlook in every sense.

It’s clear that the world doesn’t operate in such a mechanical way, but the influence of the U.S. as the largest global economic power is also prominent. In this regard, if Trump announces a new episode of détente regarding the Greenland case and resorts to dialogue with Iran, the more critical markets could calm down.

This would allow the Federal Reserve to work on a monetary policy aligned with the falling inflation rather than taking a defensive stance against elements like tariffs or rising oil prices. However, none of the scenarios can be taken for granted due to President Trump’s unpredictable temperament.

This forces investors to stay on the sidelines and only make high-risk injections into the cryptocurrency market. Therefore, having an idea about the possible short-term outcome is more than complicated.

( A Reason for Optimism

Although nothing is clear in the crypto world, it was recently reported that whales are expecting a short-term rise. According to data from Santiment, these large wallets injected about $3.2 billion into Bitcoin purchases over a 9-day period.

Basically, the view of major BTC holders is that in the short term, the coin could experience a strong price increase. Meanwhile, retail investors are heading in the opposite direction, with constant liquidations driven by fear and uncertainty.

Meanwhile, spot Bitcoin ETFs in the U.S. also show a similar behavior to retail investors. On Tuesday, these products experienced outflows of $479.7 million, according to data from Farside Investors.