Bitcoin, Ethereum Prices Extend Losses as Stocks Sag—What’s Next for Markets?

Wall Street slid on Monday, while investors are bracing themselves for important inflation data and the federal reserve policy reassessed, while Crypto remained under pressure despite a series of positive developments for regulations.

Rising trade stresses and worries about inflation contribute to the risk-off sentiment, where Bitcoin and Ethereum fall next to shares.

The S&P 500 fell by 2.6%, the Nasdaq-100 lost 3.1%and the industrial average of Dow Jones fell by 2.2%, because traders moved to the sidelines prior to this week’s inflation report.

Nikkei 225 and Hang Seng Futures pointed to further losses in Asia, indicating the constant stress of the global market.

Crypto has reflected that decline, with Bitcoin in the last 24 hours fell by 5.8% to $ 76,838 and Ethereum fell by 11.5% to $ 1,795, according to Coenececko data. Both digital assets have fallen 19% and 29% respectively in the last 30 days.

Although signs of expansion of liquidity can offer exemption this year, there are uncertainty about capital flows and monetary policy continues to exert pressure on risk provisions.

At the same time, President Donald Trump is preparing to sign an executive order aimed at reversal Anti-Crypto Banking Policy introduced during the Biden administration, sources said Decrypt On Monday.

The order is expected to reverse initiatives that are connected to “Operation ChokePoint 2.0‘A controversial bank restriction that was reportedly focused on crypto companies.

It can also include guidelines on the Stablecoin classification and the policy of the Federal Reserve Banking, strengthening the pro-Crypto attitude of the White House after Trump’s recent edition to establish a US Bitcoin Reserve.

Investors are now focused on the Wednesday Consumer Price Index (CPI) report, which is expected to increase the prices of 0.3% in February, cooling compared to the profit of 0.5%.

The CPI on an annual basis is projected at 2.9%, slightly below 3%of January, while core inflation is expected to remain at 3.2%, according to Marketwatch facts.

Any upward surprise could strengthen the expectations that the FED will slow down the cutbacks that further weigh on risk assets – including shares and crypto.

Liquidity tree?

Although the M2 money amount has expanded itself in 2024 and has remained flat this year, the uncertainty about the following movements of the FED and the tightening of the financial circumstances kept risk provisions remotely.

The balance of the FED has continued to shrink and dropped to $ 6,757 trillion, almost $ 9 trillion from April 2022, as part of the current quantitative tightening program.

While broader liquidity indicators such as M2 Stabilization suggest, the cautious attitude of the Fed over inflation and fiscal restraint in the form of Elon Musk’s Doge Keep investors defensive.

Yet some analysts see shifting liquidity conditions that can benefit risk assets in the coming months.

Jamie Coutts, the most important crypto analyst of Real Vision, pointed to the sharpest decrease in US dollar since the global financial crisis, which relieves debt costs and inject liquidity in markets.

“Such decreases announced much higher asset prices two to three months later, because liquidity tends to act with a delay,” he said Decrypt.

Coutts added that although markets are aimed at rates and fiscal tightening, many incorrectly interpret spending reductions.

“When the US government reduces waste, this makes a greater role for the private sector possible car for developing a growth and innovation-driven economy,” he said.

This could give the FED more latitude to implement speed reductions and ultimately put an end to QT, especially because Trump moves to stimulate the economy for the American mid -terms.

Nevertheless, markets will have to fight with continuous trade stresses, with American rates on China and Canada, planned for next month, which expresses concern about a global economic delay and stimulating inflation higher.

With inflation data and the American federal budget report on Wednesday, the markets will probably remain volatile.

But with Trump that pushes pro-Crypto policy and liquidity trends, the outlook for digital assets may differ from broader risk markets, Decrypt was told.