Cryptocurrency prices continued to decline on Monday as mounting macroeconomic concerns, including escalating trade tensions and uncertainty over US Federal Reserve policy, overshadowed a series of pro-crypto announcements from President Donald Trump last week.
Bitcoin, the world’s largest cryptocurrency, dropped as much as 3.7% early in the trading session before recovering slightly to settle at $82,568. The downturn comes as risk assets remain under pressure following the Federal Reserve’s decision in mid-December to pause its cycle of interest rate cuts.
Market sentiment took a further hit after Friday’s labor market data revealed a rise in US unemployment to 4.1%, up from 4% the previous month. The data also highlighted a sharp increase in underemployment levels, reaching a five-year high—a factor that has intensified fears of an economic slowdown.
“A large spike in ‘underemployment’ to five-year highs has added fuel to recession fears,” said Augustine Fan, a partner at crypto derivatives software provider SignalPlus.
Investors had initially responded positively to President Trump’s recent statements supporting cryptocurrency adoption and blockchain innovation in the US. His administration’s proposals, which include easing regulatory constraints and exploring the potential creation of a ‘Strategic Bitcoin Reserve,’ were seen as a significant boost to the industry. However, the optimism was short-lived as broader economic concerns took center stage.
The cryptocurrency market has historically been sensitive to macroeconomic factors, particularly interest rate policies and inflation trends. The Federal Reserve’s recent stance, coupled with ongoing geopolitical tensions, has added further volatility to the sector.
While crypto advocates remain hopeful that regulatory clarity and government support will drive long-term growth, immediate challenges persist. Analysts warn that continued macroeconomic uncertainty and the potential for further market corrections could keep digital assets under pressure in the near term.
Despite these headwinds, industry experts maintain that the fundamental adoption of cryptocurrency remains strong. Many investors are closely monitoring upcoming economic indicators and Federal Reserve policy decisions for further direction on market movements.
