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The cryptocurrency market faced another downturn on Friday as a risk-off sentiment dominated trading. This came in the wake of strong U.S. inflation data, coupled with heightened anticipation around Donald Trump’s Liberation Day. Bitcoin and a range of altcoins experienced significant losses, reflecting cautious investor sentiment in the face of macroeconomic uncertainty.
Bitcoin and Altcoins Take a Hit
Bitcoin (BTC) fell sharply, dropping below $84,000—down over 5.5% from its weekly high. Several altcoins mirrored this downward trend, with notable losses recorded by Polygon (POL), JasmyCoin (JASMY), Bonk (BONK), and Injective (INJ). These assets saw declines exceeding 10%, with Bonk leading the slump at a 12.4% drop.
Key Driver: Rising Inflation
The primary catalyst for the market’s slide was a report from the Bureau of Economic Analysis showing a rise in U.S. inflation for February. This data increased the likelihood of a more hawkish stance from the Federal Reserve, potentially leading to higher interest rates. Market analysts have speculated that while the Fed may pause rate hikes in the short term, rate cuts could occur rapidly in the latter half of the year.
“With the Fed on hold for now, they’ll likely need to cut rates in the second half of the year more quickly — and likely by more — than the latest dot plot shows they anticipate.”
Trump’s Liberation Day and Tariff Policies
Adding to market jitters, Donald Trump’s Liberation Day is approaching, bringing with it potential economic policies that could impact global markets. Trump has proposed reciprocal tariffs on both allies and adversaries, building on recent announcements of automobile tariffs. These policies have further contributed to market uncertainty, affecting both traditional and crypto investors.
DOGE Team Arrives at the SEC
In a surprising development, a team from Elon Musk’s Department of Government Efficiency (DOGE) visited the Securities and Exchange Commission (SEC). The team’s mission, part of Musk’s broader initiative to streamline federal agencies, has reportedly saved taxpayers over $130 billion. Their arrival at the SEC has sparked interest, particularly given the agency’s role in regulating the financial and cryptocurrency markets.
Implications for Crypto Regulation
The SEC is currently reviewing multiple spot crypto ETF filings from companies such as Canary, Grayscale, and Franklin Templeton. While it’s unclear what recommendations the DOGE team will make, reports indicate that 500 SEC employees have already accepted voluntary buyouts or deferred-resignation offers. This shake-up could influence how the agency approaches crypto regulation moving forward.
SEC Leadership and Policy Shifts
Meanwhile, Paul Atkins, a nominee for SEC Chair, faced congressional scrutiny this week. With Republicans controlling Congress, his approval seems likely. Under the Trump administration, the SEC has adopted a more favorable stance toward cryptocurrencies, signaling potential approval of several crypto ETFs and easing legal pressures on firms like Coinbase, Kraken, and Uniswap.
The evolving regulatory environment, combined with macroeconomic factors, underscores the volatile nature of the crypto market. Investors are advised to stay informed and consider both short-term risks and long-term opportunities as the landscape continues to shift.
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