Last week, the Crypto Fear and Greed Index dropped to its lowest level since 2022, and there are several reasons for Bitcoin's current bearish outlook: First, the macroeconomic situation does not constitute a bullish factor for cryptocurrencies, and the Atlanta Fed's GDPNow model now forecasts that US GDP will contract by 2.8% by the end of the first quarter of 2025. From an economic perspective, this forecast is nothing short of disastrous compared to the 3.9% growth predicted four weeks ago. Another important factor is Trump's proposed tariff policy. While some analysts believe that tariffs are not the main reason, the crypto market experienced a sharp decline when Trump recently announced a 25% tariff on the EU. In other words, macroeconomic factors significantly influence the market sentiment in the crypto industry.
Since the spot Bitcoin ETF was approved, cryptocurrencies have been deeply integrated with traditional finance. So if the US economy falls into recession, the drawbacks of this integration will be fully exposed.