Bitcoin’s price volatility surged to a six-month high this week as mounting U.S. economic uncertainties, including trade tensions and fears of fiscal contraction, triggered wild swings across cryptocurrency markets. The Bitcoin Volatility Index reached 3.6% on March 19, its highest level since August 2024, reflecting escalating investor anxiety over macroeconomic instability.
The cryptocurrency’s price dipped to $77,041 earlier this month, a 30% decline from its all-time high of $109,590 in January, before rebounding to $84,000. Analysts attribute the turbulence to President Donald Trump’s aggressive tariff policies, including a 25% levy on European Union imports announced this week, which amplified fears of global trade disruptions and inflationary pressures. The Fear & Greed Index, a sentiment gauge, plummeted to 10 in late March—indicating “extreme fear”—just weeks after hitting “extreme greed” levels.
Market watchers note Bitcoin’s sensitivity to fiscal policy shifts, particularly Trump’s push for stringent government spending cuts and the newly formed Department of Government Efficiency. Uldis Tearudklans of Paybis warned that conflicting signals between fiscal tightening and potential Federal Reserve rate cuts create a “complex feedback loop” threatening liquidity. The Federal Open Market Committee left rates unchanged on March 19 but hinted at possible cuts later this year, leaving traders divided on Bitcoin’s near-term trajectory.
CryptoQuant CEO Ki Young Ju cautioned against declaring a bear market despite the volatility, emphasizing Bitcoin’s resilience amid sector-specific challenges. Meanwhile, institutional investors remain watchful as Bitcoin ETFs face outflows and traditional markets reel from trade policy shocks. The S&P 500 erased post-2024 election gains, while the CBOE Volatility Index spiked to 30, its highest since August 2024.
While short-term traders capitalize on price swings, analysts like Arthur Hayes predict Bitcoin could stabilize near $70,000 before recovery. President Trump’s recent pro-crypto pledges, including plans for a strategic Bitcoin reserve, contrast with market reactions to his protectionist trade agenda, leaving investors navigating conflicting economic narratives.
Sources:
https://www.ainvest.com/news/bitcoin-volatility-surges-economic-uncertainty-2503/
https://cointelegraph.com/news/bitcoin-volatility-hits-3-6-heightened-market-uncertainty
https://www.tradingview.com/news/cointelegraph:4ff8201c6094b:0-bitcoin-bull-market-in-peril-as-us-recession-and-tariff-worries-loom/
Bitcoin News: Volatility Index At 6-Month High, Here’s Implication For Price
https://www.cointribune.com/en/bitcoin-collapses-under-global-economic-uncertainties/
https://www.coindesk.com/markets/2025/01/20/bitcoin-volatility-climbs-to-6-month-high-as-options-frenzy-picks-up
