Bitcoin Plummets to Four-Month Low Amid U.S. Recession Fears and Trade Uncertainty

Bitcoin's Sharp Decline

Bitcoin fell sharply on Tuesday, hitting a fresh four-month low of $76,677.1 before stabilizing at $80,289.1 by 01:50 ET (05:50 GMT). The cryptocurrency has now lost nearly 14% so far in 2025, driven by growing fears of a U.S. recession and uncertainty over additional trade tariffs.

The decline mirrored steep losses in global stock markets, as risk appetite diminished amid economic uncertainty. President Trump's recent comments on potential reciprocal tariffs and his refusal to rule out a U.S. recession further exacerbated investor concerns.

Strategy's $21 Billion Fundraising Fails to Boost Sentiment

Bitcoin saw little support from Strategy's (NASDAQ:MSTR) announcement of a $21 billion share offering, aimed at purchasing more Bitcoin. Despite the company's commitment to expanding its Bitcoin holdings, its existing investments are underwater, with a $4 billion loss on its $21 billion Bitcoin purchases made since November 10.

Broader Crypto Market Suffers

The broader crypto market also sank, with major altcoins tracking Bitcoin's losses. Ether, the second-largest cryptocurrency, dropped 8% to $1,900.70, its lowest level since late 2021. Other notable declines included XRP, Solana, and Cardano, which fell between 1.6% and 3.1%.

Meme tokens were particularly hard-hit, with Dogecoin plunging 7.9% and $TRUMP hitting a record low below $10. The lack of positive cues and increasing economic uncertainty have deterred even bargain hunters, leaving crypto markets trading near consistent lows.

Economic Headwinds Weigh Heavily

Bitcoin and other cryptocurrencies are particularly sensitive to economic headwinds due to their speculative nature. As fears of a U.S. recession grow, crypto markets are likely to remain under pressure, with investors shying away from risk-driven assets.

The combination of economic uncertainty, regulatory ambiguity, and lackluster investor sentiment has created a challenging environment for Bitcoin and the broader crypto market.