The cryptocurrency market is in a state of hesitation, caught between bullish expectations and economic reality. Bitcoin, once surging past $100K, has since retreated to a frustrating range between $78K and $85K, leaving traders wondering when the next major breakout will occur.
However, the answer isn’t within crypto itself. Instead, global economic forces like tariffs, monetary policy, and liquidity injections hold the key to Bitcoin’s next move.
Matthias, in The CoinRock Show discussion, broke down the major economic shifts impacting the market.
He emphasized that Bitcoin and the broader crypto space will continue to trade sideways without a clear shift in fiscal and monetary policies. The excitement of early 2024 has faded, and the market is now waiting for a major catalyst.
Tariffs and the Trump Effect on Crypto Markets
One of the most significant macroeconomic concerns is the impact of new tariff policies.
The Trump administration’s recent decisions to introduce higher tariffs on imported goods have raised alarms across financial markets, fueling concerns about slower economic growth and increased inflation.
Trade wars and protectionist policies have historically led to market turbulence as investors weigh the risks of declining global trade.
Matthias pointed out that if these tariffs lead to a weaker economy, it could have a domino effect on risk assets, including cryptocurrencies.
“We’re seeing a shift where Bitcoin and crypto markets are reacting more to global economic policies than ever before. Tariffs, fiscal decisions, and regulatory moves are becoming as important as halving events or institutional adoption.”
This is a major evolution for crypto markets. In previous cycles, Bitcoin’s price action was driven primarily by network effects, retail hype, and halvings.
Now, the market is intertwined with broader economic trends, making it increasingly susceptible to external financial pressures.
The Role of Quantitative Easing
Another crucial factor holding back Bitcoin’s next surge is the Federal Reserve’s stance on liquidity.
The market is still operating under a period of Quantitative Tightening (QT), where liquidity is being pulled from the financial system to combat inflation. This has created a capital drought, limiting the amount of new money flowing into crypto markets.
Historically, Bitcoin has thrived during periods of Quantitative Easing (QE), when central banks inject liquidity into the economy.
The massive bull run of 2020-2021 was largely fueled by unprecedented QE measures following the pandemic, which led to an influx of institutional and retail investment into Bitcoin and altcoins.
However, the current reality is different. The Federal Reserve remains cautious, and interest rates remain high, restricting access to cheap capital. Without a clear signal that QE will return, the market lacks the fuel for another explosive rally.
Market Uncertainty Keeps Investors on the Sidelines
The combination of tariff concerns and tight liquidity conditions has left the crypto market hesitant. Bitcoin’s price action reflects this uncertainty as it struggles to break past key resistance levels.
Meanwhile, altcoins have taken an even harder hit, with many projects experiencing losses of 30-50% from their recent highs.
Matthias acknowledged that while long-term fundamentals for Bitcoin remain strong, the market will unlikely see an immediate turnaround.
He stressed the importance of understanding the broader financial landscape rather than expecting an overnight reversal.
“Everyone is waiting for that one big catalyst to send Bitcoin past $100K again, but the reality is different. Until liquidity conditions improve and economic policies shift, the market will stay choppy.”
What Needs to Happen for the Next Rally?
The next major move for crypto will depend entirely on shifts in macroeconomic policy. If the Federal Reserve signals a return to lower interest rates and liquidity injections, Bitcoin could quickly regain momentum.
Additionally, if tariff policies are adjusted or global trade tensions ease, investors may regain confidence in risk assets.
Until then, the market is holding, with price movements dictated by economic updates rather than internal crypto developments.
Traders should remain cautious yet prepared, knowing that the market could move rapidly when the next big catalyst arrives. Patience is key—when the market shifts, those who stay informed will be ready to capitalize.
