Emmanuel OchayiBitcoin has fallen sharply, leaving traders questioning the reasons behind the sudden drop. The price of Bitcoin has dropped by 4.8%, currently sitting at $81,729. Ethereum has also seen losses, falling 8%, while Dogecoin has lost 13%.
Despite hopes that the Strategic Bitcoin Reserve announced by President Donald Trump would boost the market, it has continued to decline. Here are three key reasons behind the price crash.
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1. Uncertainty Over U.S. Bitcoin Reserve Strategy
President Trump signed an Executive Order to create a Strategic Reserve, aiming to position the cryptocurrency as part of national assets. However, the order does not allocate funds for it immediate purchases.
A report from QCP Capital suggests that the market reacted negatively to this lack of a budget commitment. Traders had expected direct purchases, but the government plans to use existing seized one instead.
David Lawant, head of research at FalconX, noted “Bitcoin tumbled about 5% immediately following the announcement before partially recovering. This reflects concerns that the U.S. government will not be buying them in the open market anytime soon.”
This uncertainty has led to a sell-off as traders reassess the potential impact of the reserve.
2. Profit-Taking After Bitcoin’s Recent Surge
Before the announcement, Bitcoin had risen above $92,000, fuelled by speculation that the U.S. government would actively buy it. However, as it became clear that no immediate purchases were planned, traders started taking profits.
A rapid decline followed, with Bitcoin falling 5.7% in under an hour. Many short-term investors decided to cash out, leading to further price drops.
The sell-off has also impacted Ethereum and other altcoins, with many traders moving funds to stable assets in response to market uncertainty.
3. Broader Market Fears and Trade Tensions
Bitcoin’s drop is also linked to wider market concerns. President Trump’s new trade tariffs have caused turbulence in global financial markets, affecting stocks and risk assets, including cryptocurrencies.
Investors are watching for further government actions that could impact the market. A 60-day Treasury review is set to explore ways to increase it reserves without using taxpayer money. Until then, uncertainty remains high.
What’s Next for Bitcoin?
Despite the crash, some analysts see long-term potential in the U.S. government’s recognition of Bitcoin. If further legislation supports Bitcoin as part of national reserves, it could lead to institutional adoption.
Upcoming events, such as the Bitcoin for America summit on March 11, may provide further clarity on future government involvement. Until then, it price is likely to remain volatile as traders react to policy updates and economic conditions.
Emmanuel Ochayi is a journalist. He is a graduate of the University of Lagos, School of first choice and the nations pride. Emmanuel is keen on exploring writing angles in different areas, including Business, climate change, politics, Education, and others.
