The global cryptocurrency market witnessed heightened volatility and a significant downturn following a series of major macroeconomic announcements, including new tariffs proposed by the U.S. President Donald Trump, a landmark Bitcoin tax exemption bill in the Czech Republic, and increasing demand for gold-backed cryptocurrencies amid bullish gold price forecasts by major banks.

Market Reaction to Trump’s Tariffs: A Decline in Bitcoin and Ethereum Prices

On February 11, 2025, the cryptocurrency market experienced a sharp dip after U.S. President Donald Trump announced new tariffs aimed at various global economies. According to CoinMarketCap, Bitcoin (BTC) plunged from $48,000 to $46,500 within the first hour of the announcement at 9:00 AM EST. Ethereum (ETH) followed suit, declining from $3,200 to $3,050 in the same timeframe. The total market capitalization of cryptocurrencies dropped by 3.5% to $1.7 trillion as traders reevaluated market risks.

The sudden decline in crypto prices was attributed to concerns over global trade tensions and the potential impact on institutional capital flows into the digital asset space. As a result, the trading volume for major cryptocurrencies surged by 20%, with Bitcoin trading volume reaching $35 billion and Ethereum at $15 billion, as per CoinGecko.

The BTC/USD trading pair experienced significant volatility, hitting a low of $46,300 before rebounding slightly to $46,800 by 11:00 AM EST. Ethereum exhibited a similar pattern, dropping to $3,030 before stabilizing at $3,060 (Source: TradingView). This sell-off was largely driven by institutional investors and ‘whales’, as evidenced by a 1,000% increase in transactions exceeding $1 million, according to Glassnode.

Market sentiment, as measured by the Fear and Greed Index, fell from 65 to 50, indicating a shift from optimism to caution among investors. Analysts have noted that the market remains highly sensitive to macroeconomic announcements, particularly those affecting global trade policies.

Technical Analysis: Indicators Point to Bearish Momentum

Technical indicators provided further insights into the market downturn. Bitcoin’s Relative Strength Index (RSI) dropped from 70 to 62, signaling a move from overbought to neutral territory. Meanwhile, Ethereum’s Moving Average Convergence Divergence (MACD) showed a bearish crossover, where the MACD line crossed below the signal line, indicating potential further downside (Source: TradingView).

Additionally, altcoins like Cardano (ADA) and Solana (SOL) saw increased trading activity, with ADA’s trading volume rising 15% to $1.2 billion and SOL’s increasing 18% to $800 million (Source: CoinGecko). However, market depth data from Binance and Coinbase revealed a shift toward sell orders, suggesting that many traders were looking to exit positions in response to the uncertainty (Source: Kaiko).

Czech Republic’s Bitcoin Tax Exemption Bill: A Boost for Long-Term Holders

Amid the broader market decline, a positive regulatory development emerged from the Czech Republic, where President Petr Pavel signed a bill exempting long-held Bitcoin from capital gains tax. The bill, which was signed on February 11, 2025, and took immediate effect, is expected to attract long-term crypto investors looking for a favorable regulatory environment.

Following the announcement, Bitcoin saw a modest recovery, rising from $46,800 to $47,200 by 12:00 PM EST. Czech-based exchanges reported a 30% increase in BTC trading volume to $500 million, indicating that local investors were responding positively to the new tax exemption (Source: CoinGecko).

Analysts believe this move could set a precedent for other European countries to adopt more crypto-friendly regulations, encouraging Bitcoin as a store of value rather than a speculative asset. The Czech Republic’s decision aligns with growing global efforts to clarify cryptocurrency taxation policies, an area that remains highly contested in several major economies, including the United States and the European Union.

Gold-Backed Cryptocurrencies Gain Traction as Banks Raise Gold Price Forecasts

Another significant trend emerging from the cryptocurrency market is the increasing demand for gold-backed digital assets, following a series of bullish gold price forecasts from major global banks.

On February 11, 2025, at 10:00 AM EST, Tether Gold (XAUT) saw a 2% price increase to $2,040, while PAX Gold (PAXG) rose 1.5% to $2,035 (Source: CoinMarketCap). The trading volume for these assets surged by 10%, with XAUT reaching $200 million and PAXG at $150 million (Source: CoinGecko).

The rally in gold-backed cryptocurrencies is being driven by increased institutional interest in assets linked to physical commodities. Notably, major investment banks, including Goldman Sachs and JPMorgan, have raised their gold price forecasts, predicting that gold could reach $2,500 per ounce by the end of 2025. Given the strong correlation between gold-backed cryptocurrencies and traditional gold markets, this trend could bolster investor confidence in digital assets backed by tangible reserves.

Furthermore, the rise of gold-pegged digital assets aligns with a broader shift towards asset-backed stablecoins, which provide investors with a hedge against market volatility while maintaining exposure to the benefits of blockchain technology.

Macroeconomic Uncertainty and Future Outlook for Crypto Markets

The cryptocurrency market’s reaction to these global events highlights its deep sensitivity to macroeconomic developments. With Trump’s tariff policies, regulatory shifts in Europe, and rising interest in asset-backed digital currencies, investors are closely watching how these factors will shape crypto market sentiment in the coming weeks.

While some analysts believe that the tariff-induced market downturn is temporary, others caution that further economic instability could trigger additional sell-offs. The upcoming U.S. Federal Reserve policy decisions and global inflation trends will likely play a critical role in determining whether Bitcoin and other major cryptocurrencies can regain momentum.

Additionally, the Czech Republic’s tax exemption law could set a precedent for other European nations, potentially encouraging more crypto-friendly regulations worldwide. Meanwhile, gold-backed cryptocurrencies continue to gain legitimacy as institutional investors seek alternative hedges against economic uncertainty.

In conclusion, as the cryptocurrency market navigates a volatile macroeconomic landscape, investors are expected to adopt more cautious trading strategies, balancing short-term market reactions with long-term growth prospects.

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photo source: Google

By: Montel Kamau

Serrari Financial Analyst

12th February, 2025