Bitcoin Price Plummets Below $80,000 Amid U.S. Tariff Fears and Cautious Sentiment

Bitcoin Price Tumbles Amid Tariff Concerns and Inflation Data

Bitcoin's price fell sharply on Friday, dropping below the critical $80,000 level and reaching as low as $78,393.36. The cryptocurrency is on track for a 20% decline in February, marking a significant retreat from its all-time high of $108,000 following President Trump’s election victory. The initial rally, driven by optimism over pro-crypto policies, has been derailed by concerns over U.S. tariffs and the Federal Reserve’s hawkish stance.

U.S. Tariffs and Inflation Data Weigh on Sentiment

President Trump’s announcement of 25% tariffs on imports from Mexico and Canada, along with an additional 10% levy on Chinese goods, heightened fears of global trade tensions. This has driven investors away from risk-sensitive assets like cryptocurrencies. Meanwhile, the U.S. Personal Consumption Expenditures (PCE) report showed inflation eased in January, with the core PCE index rising 0.3% monthly and 2.6% annually. Despite aligning with expectations, the data did little to ease concerns over a stronger U.S. dollar and potential interest rate hikes.

Bitcoin’s Role as a Store of Value Questioned

Capital Economics highlighted that Bitcoin’s recent volatility and lack of intrinsic value make it unlikely to replace fiat currencies or gold as a preferred store of value. The firm noted Bitcoin’s slow transaction speeds and high volatility as significant hurdles to mainstream adoption. Even if Bitcoin were to pose a threat, central banks could accelerate the development of their own digital currencies, further limiting its potential.

Altcoins Suffer Steep Declines

Most altcoins followed Bitcoin’s downward trend, with Ethereum dropping over 6% to $2,166.14 and XRP losing nearly 4% to $2.10. Solana and Cardano saw mixed movements, while meme tokens like Dogecoin and $TRUMP also declined. The broader crypto market remains in a risk-off mood, with investor sentiment battered by macroeconomic uncertainties.

The sell-off underscores the challenges Bitcoin and other cryptocurrencies face in establishing themselves as reliable stores of value amid global economic instability.