Crypto Daybook: BTC Recovery Stifled by Recession Fears and Memecoins

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Bitcoin’s Current Stability Amid Market Instability

Bitcoin (BTC) has found some stability around its 200-day average at about $84,000 after dipping below $77,000 early last week. The broader market recovery was led by memecoins, layer-2 tokens, and gaming tokens. However, maintaining a sustained uptick could still be a challenge, especially since President Donald Trump’s administration appears to have a negative impact on market stability than many expected.

Market Optimism Turns to Caution

Just two months ago, when Trump took office, the crypto market was buzzing with optimism that any turbulence created by tariffs would lead to prompt policy support from the White House. That optimism seems to have been misplaced. Over the weekend, Treasury Secretary Scott Bessent stated that corrections are healthy and normal, hinting that the anticipated “Trump put” might take longer to materialize than traders hoped.

More importantly, on NBC News’ “Meet the Press” on Sunday, Bessent’s comments starkly contrasted with government officials’ typical attitude of emphasizing a “glass half full” perspective when the going gets tough. This could mean Trump isn’t ready to back down from his tariff fight just yet, keeping risk assets feeling uneasy.

Impact of Stock Prices on Bitcoin

If stock prices continue to fall, it’s hard to imagine Bitcoin staying resilient for long, especially given the lack of uplifting narratives in the crypto market. Greg Magadini, director of derivatives at Amberdata, shared in an email, “It’s just a guess, but I doubt Trump will reverse course on tariffs and his drive to bring U.S. manufacturing back at these price levels. I can’t picture a scenario where risk assets crash and crypto remains unaffected, or where the VIX increases and crypto’s implied volatility doesn’t follow suit.”

Deteriorating Sentiment on Main Street

Plus, sentiment is deteriorating on Main Street, which could add to the recent risk aversion in both the crypto and traditional markets. A chart shared on X by Otavio Costa, a macro strategist at Crescat Capital, highlights a record number of U.S. consumers expecting conditions to worsen over the next year (see Chart of the Day, below).

Traders Await Fed Meeting for Cues

The focus on macro means traders will follow Wednesday’s Fed meeting for cues on the central bank’s readiness to deploy stimulus. The bar is low after Chairman Powell said the bank is in a wait-and-watch mode to assess the impact of Trump’s policies before cutting rates.

Aave’s Decentralized Finance Initiative

In other news, Aave Labs’s Founder, Stani Kulechov, announced that the Aave decentralized autonomous organization had reached a clear consensus against introducing a new token for Horizon, an Aave initiative to integrate real-world assets into decentralized finance.

Global Political Climate and Crypto

Trump is also in discussions with Russian President Vladimir Putin about ending the Ukraine war. This geopolitical tension adds another layer of uncertainty to the market. Additionally, a digital asset prime broker recently announced it had completed the “first-ever” block trade in CME’s SOL futures with StoneX as counterparty.

Stay Alert for Market Changes

As the crypto landscape continues to evolve, staying informed is crucial. Omkar Godbole is a Co-Managing Editor at CoinDesk, providing insights and analysis on the latest developments in the crypto world. Make sure to keep an eye on the market trends and news updates to navigate these turbulent times effectively.