Bitcoin staged a modest recovery from nearly 10-month lows on Tuesday but stayed under pressure below the $80,000 mark, as weekend-driven liquidations and lingering uncertainty over U.S. monetary policy continued to weigh on sentiment.
The world’s largest cryptocurrency was last down 0.74 percent at $78,085 as of 10:42 GMT.
Over the previous 24 hours, bitcoin slid to a low of $74,635.5, its weakest level since early April.
Macroeconomic uncertainty impacts market sentiment
The steep weekend drop was fueled by broad liquidations of leveraged trades, underscoring how much speculative positioning had accumulated during last year’s rally. Figures from derivatives monitoring firms showed that billions of dollars in cryptocurrency positions were erased in a short span, with long bets making up most of the forced liquidations.
Limited liquidity amplified volatility, enabling relatively modest price moves to set off large-scale liquidations.
Market sentiment has also been pressured by broader macroeconomic uncertainty, as investors weigh the implications of Kevin Warsh’s nomination as the next chair of the U.S. Federal Reserve, prompting a reassessment of the likely trajectory of interest rates.
Warsh is broadly seen as leaning toward a more hawkish policy approach, stoking worries that financial conditions could stay restrictive for longer. Meanwhile, the release of January’s closely watched U.S. jobs report, originally scheduled for Friday, has been delayed because of a partial government shutdown, according to the Bureau of Labor Statistics.
Read: Bitcoin hits 10-month low near $77,500 as hawkish policy, AI stock selloff batter markets
Regulatory pressures persist
Bitcoin’s downturn also continues to be linked to regulatory pressures, including stalled U.S. legislation on crypto market structure, and early signs of a hawkish repricing of Federal Reserve policy.
The cryptocurrency industry and major U.S. banks remain divided over how to regulate yields on stablecoins following a White House meeting, underscoring ongoing hurdles to advancing long-stalled crypto legislation.
Executives from crypto companies, banking groups, and government agencies recently met in Washington to discuss market-structure rules, but made little progress on the question of whether stablecoin issuers should be permitted to offer yield-like returns.
Banks warned that yield-bearing stablecoins could increase deposit outflows and threaten financial stability, while crypto firms argue that such features are essential for growth and maintaining competitiveness.
As Bitcoin declined, the broader crypto market saw mixed movement. Ethereum, the world’s second-largest cryptocurrency, rose 0.16 percent to $2,281.48.
XRP, the third-largest crypto, fell 0.74 percent to $1.6. Solana advanced 0.05 percent to $102.80, while Cardano climbed 1.28 percent to $0.2955.
