Bitcoin bulls originally expected a strategic Bitcoin reserve, but what they got instead were "Trump" and "Melania" tokens.

Written by: Stephen Alpher

Translated by: Centreless

Summary

• The speculative bubble in the overall cryptocurrency market has burst, and Bitcoin is now caught in a frenzy of sell-offs.

• Many Bitcoin bulls have turned into bears, at least in the short term.

• The traditional market is also stumbling, and the resulting drop in interest rates may be paving the way for the next bull market in Bitcoin.

"If it weren't for you, I wouldn't be in this mess. You've brought me so much trouble." — In Martin Scorsese's "Casino," Robert De Niro's Ace Rothstein says this to Joe Pesci's Nicky Santoro.

It is understandable that Bitcoin investors blame the drop in Bitcoin prices on other parts of the cryptocurrency market. Bitcoin's price has fallen over 20% from its historic high of over $109,000 five weeks ago, dipping as low as $87,000 earlier on Tuesday.

Bitcoin reached this record the day before the presidential inauguration, when the cryptocurrency market was in a speculative frenzy over various memecoins. The Trump team thought it was a good idea to launch tokens related to the incoming president and first lady, but these tokens quickly plummeted after an initial surge, causing significant losses for almost everyone except insiders.

Many memecoins were created on the Solana blockchain, whose native token SOL has since dropped over 50%, leading the decline of major cryptocurrencies since that weekend in January.

Bitcoin bulls originally expected a strategic Bitcoin reserve, but what they got instead were "Trump" and "Melania" tokens.

Bybit Exchange Hacked

Despite the significant shrinkage of memecoins in recent weeks and the dire state of the entire cryptocurrency market, Bitcoin's price has mostly remained within a relatively narrow range, not far from its historical highs. Just 96 hours ago, Bitcoin, the world's largest cryptocurrency, was rising and seemed poised to reclaim the $100,000 mark.

However, the Bybit exchange was hacked.

While Bitcoin investors quickly pointed out that this breach was unrelated to Bitcoin itself and instead highlighted inherent flaws in Ethereum's technology, Ethereum's price plummeted (down 15% since then and still falling), and the downward trend in the entire cryptocurrency market spread to Bitcoin.

Bulls Turn to Bears

Self-proclaimed permanent bull StackHodler wrote on the X platform (formerly Twitter) on February 25: "Our expectations for this cycle are far above $108,000, so we tell ourselves that the price can't have peaked yet. We will definitely rise higher in 2025, right?" He continued, "The fact is, no one can be sure. We just experienced short-term holders realizing prices at $92,000… We may need to reassess the 200-day moving average around $82,000."

Jeff Kendrick of Standard Chartered had previously predicted that Bitcoin's price would reach $200,000 by the end of the year, writing: "It's not time to buy the dip yet; prices may fall to just above $80,000. I think we will see a single-day outflow of $1 billion from Bitcoin ETFs (the worst day so far saw an outflow of $583 million) before buying the dip becomes attractive."

Seeds of the Next Bull Market Are Being Sown

Although the impact on traditional markets is far less severe than that on the cryptocurrency market, they are also stumbling. Measured by the S&P 500 index, the U.S. stock market experienced its worst week since Trump's inauguration last week. The tech-heavy Nasdaq index peaked in December and is now down 5% from that level.

Pick any reason: tariffs, "DOGE" (not referring to the cryptocurrency Dogecoin, but rather the cost-cutting policies led by Musk's government), or just a cooling of the previously exuberant market sentiment, but the interest rate market has already reacted.

The yield on the U.S. 10-year Treasury bond has fallen from 4.80% before Trump's inauguration to 4.32%. Expectations for the Federal Reserve to ease monetary policy have risen significantly. According to the CME's FedWatch Tool data, the likelihood of a rate cut in May has more than doubled in the past week to 30%, while the probability of two rate cuts in June has more than doubled to 15%.

Kendrick concluded: "The decline in U.S. Treasury yields is a significant long-term positive factor for Bitcoin."

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