Crypto Market Extends Losses as FOMC and Trade Tensions Unsettle Investors

The cryptocurrency market posted losses for a second consecutive day as geopolitical tensions escalated and the Federal Open Market Committee (FOMC) meeting approached, unsettling investors.

Bitcoin (BTC) fell 2% over the past 24 hours to $81,700, while Ethereum (ETH) dipped 1.3% to $1,884. Meanwhile, XRP plummeted 4.5% to $2.24, and Solana (SOL) dropped 4.4% to $122. The total cryptocurrency market cap declined by 4% over the past 24 hours to $2.77 trillion, according to CoinGecko.

Total liquidations during the same period neared $229 million across 110,512 traders, with BTC accounting for $70 million and ETH for $37 million, according to CoinGlass data.

Trade Tensions

Experts cited multiple factors behind the market downturn but highlighted a potential trade war as the most significant.

“[President Donald] Trump’s tariffs are still the spark that lit the fire,” said Jonathan de Wet, Chief Investment Officer at Zerocap. The US president is also expected to host a call with Russian President Vladimir Putin later today regarding a cease-fire with Ukraine.

de Wet referenced a recent Bank of America survey that identified a potential global trade war as the most bearish intermarket scenario for 2025, ranking it even above concerns about AI competition from China.

“Volatile sentiment is hitting everything from cryptocurrencies to global financial markets, creating a cascading effect that has amplified market instability and contributed to a general risk-off sentiment across asset classes,” he added.

Bitcoin

Experts also noted that Bitcoin has not been immune to the broader market uncertainty.

“Bitcoin’s drop despite Trump’s pro-crypto stance has left many scratching their heads,” said Gracy Chen, CEO at Bitget.

However, Chen pointed to growing institutional interest in Bitcoin, emphasizing that discussions about a US strategic Bitcoin reserve are becoming more serious. While the government has not yet started acquiring BTC, she believes a shift could be on the horizon, potentially bringing institutional legitimacy and long-term price stability.

“Regardless, I don't see BTC falling below $70K, possibly $73-78K, which is a solid time to enter for any buyers on the fence,” Chen said. “In the next 1-2 years, BTC at $200K isn’t as far-fetched as most would think.”

Fed Decision Looms

In addition to trade tensions, investors are closely watching the upcoming FOMC meeting, which could impact short-term crypto price movements.

Ryan Lee, Chief Analyst at Bitget Research, noted that the FOMC meeting is expected to maintain the Federal Funds rate at 4.25%–4.50%, with the Federal Reserve taking a cautious, data-driven approach in response to persistent inflation and solid economic growth.

He explained that the crypto market could experience a short-term rally if the Fed signals future rate cuts. Conversely, a more hawkish stance could weigh on digital assets.

“Volatility is likely around the announcement, driven by Chair Powell’s remarks and updated projections, but the crypto market may continue showing increasing independence from Fed decisions,” Lee said.