Today marks a pivotal moment for cryptocurrencies as they encounter significant headwinds. A confluence of factors expedited a decline, with Bitcoin hitting new daily lows as this article unfolds. Of particular importance was the Supreme Court hearing about the removal of a Federal Reserve member, which has wide-reaching implications for the financial landscape.
The Reasons Behind Cryptocurrency Decline
At 18:00, investors were advised to pay attention, and indeed, developments turned against the crypto market. The U.S. Supreme Court leaned towards opposing Trump’s immediate removal of Fed Chairman Cook. Powell’s support in the hearing notably dampened sentiment further. Should the decision favor Cook, judicial protection of the Fed’s independence would bolster a future forecast of a maximum of two rate cuts by 2026.
As this piece was being crafted, Kevin Hassett, the White House Senior Advisor, had just completed crucial statements. As a key figure of Trump’s economic policy, Hassett shared insights about upcoming shifts.
“Trump is in Davos to face realities with data. A major housing policy announcement is imminent. It seems that Fed members wish to have a say on every matter. We anticipate reducing the budget deficit further over the next year. Aligning our allies closer to China is not our objective. Trump disrupts a system that needs to be disrupted. We may witness GDP growth exceeding 5% over two consecutive quarters.”
Turbulent International Relations
Denmark recently rejected Trump’s negotiation plea over acquiring Greenland. Trump pledged not to exercise excessive power and called for urgent talks.
Key factors include Trump’s insistence on Greenland, tense exchanges between the US and EU about Greenland, favorable employment data nullifying potential rate cuts in January, and Powell’s backing of Cook in court. There’s also the upcoming implementation of mutual tariffs between the US and EU on February 1st. Moreover, major European pension funds are selling US bonds in response to Trump’s unpredictability, as a stance against the Greenland issue.
In summation, the amalgamation of these factors justifiably impacts cryptocurrency values negatively.
