Analysts Revealed the Biggest Reason for the Drop in Bitcoin! When Will the Rise Happen Again?

In November, Donald Trump, who won the presidential race, brought a rise to Bitcoin and altcoins. In the rally initiated by Trump, Bitcoin reached new highs of 108,000 dollars, while Ethereum also surpassed 4,000 dollars.

However, this rally lost momentum as the new year approached and the price of Bitcoin dropped to levels around $90,000.

At this point, while it is wondered whether the declines will continue, analysts generally think that the cryptocurrency market is moving away from the Trump narratives.

Analysts point out that the dollar has strengthened and put pressure on cryptocurrencies like Bitcoin due to Trump's departure from the narrative and hawkish statements from the FED.

Therefore, analysts stated that they expect Bitcoin to face downward pressure in the short term.

Zach Pandl, Research Director of digital asset manager Grayscale Investments, said in an interview with CNBC that the current headwind for Bitcoin is a stronger dollar.

Pandl said that Bitcoin is held by the power of USD and that this situation is temporary, and he said that the situation will change as Trump's inauguration day approaches.

Pandl added that the recent declines in BTC are primarily due to the markets beginning to realize the negative impact of the Trump administration's policies, including tariffs, on BTC.

"The jobs report raised expectations that the Fed's interest rate cuts will be delayed, thus supporting the dollar. As the dollar strengthened, it put downward pressure on the price of Bitcoin. That's why Bitcoin's current problem is a strong dollar."

Pandl added that despite macroeconomic challenges, the expectation of a rise for Bitcoin continues.

In addition to Grayscale analyst Zach Pandl, Alex Thorn, the research head of crypto-focused firm Galaxy Digital, also noted that the decline in Bitcoin is due to the Fed's cautious stance and uncertainties surrounding Trump's economic policies.

Thorn also warned that the factors he listed could lead to short-term declines in risky assets such as Bitcoin.

JPMorgan analyst Kenneth Worthington said that since it is expected that Congress will prioritize non-crypto issues in the next three months, the potential positive effects of crypto-friendly legislation may not emerge quickly. At this point, he pointed out that crypto prices may not experience expected short-term increases.