PANews reported on March 10 that according to Bloomberg, on Monday, the prices of cryptocurrencies continued to fall, with the escalating trade war tensions and the weakening expectations of further interest rate cuts by the Federal Reserve offsetting the positive impact of a series of statements by US President Donald Trump last week supporting cryptocurrencies. Since the Federal Reserve hinted at a pause in rate cuts in mid-December last year, risk assets such as cryptocurrencies have been under pressure. Last Friday's employment data showed that the US unemployment rate rose from 4% to 4.1%, further increasing market uncertainty. Augustine Fan, a partner at crypto derivatives software provider SignalPlus, said: "The 'underemployment' rate has soared to a five-year high, exacerbating concerns about an economic recession and pushing yields lower, as rate cut expectations have been brought forward to early summer."
Trump's friendly stance towards cryptocurrencies, including signing an executive order to establish a US Bitcoin reserve and separate other token reserves, as well as a high-profile summit with industry executives in Washington, had limited impact on boosting market sentiment. Although the government has promised to use the confiscated cryptocurrencies to fund the reserves, the lack of new capital commitments has disappointed investors. Jeff Mei, Chief Operating Officer of crypto exchange BTSE, said: "The market sees this summit as disappointing, and the major cryptocurrency prices have fallen after the news that the much-anticipated crypto reserves will only hold the government's existing assets." Mei added: "Bitcoin is likely to fall to the $70,000-$80,000 range in the coming weeks. Only when this trade war ends and the Federal Reserve resumes rate cuts will the major cryptocurrencies regain their previous historical highs."
The US currently has about $1.7 billion in Bitcoin and about $400 million in other tokens, mainly due to asset seizures related to civil and criminal cases. Ari Paul, co-founder of BlockTower Capital, said that given recent developments such as the SEC's weakened enforcement, it is reasonable for investors to be more optimistic about cryptocurrencies, but other factors are more subtle and even negative. Paul said in a message: "The government's apparent capriciousness and favoritism in choosing strategic reserve assets - especially after the launch of the Trump and Melania tokens - is a strong deterrent for investors. This gives the impression that the Trump administration is choosing and promoting 'insider' assets based on lobbying, and today's cryptocurrency market is largely a casino for short-term trading."
