Bitcoin Slumps Below $87K, but Rate Cuts Could Spark the Next Bull Run
The outlook for interest rates has softened significantly in recent weeks, setting the stage for potential market shifts.
Bitcoin Takes the Heat for Crypto Market Chaos
Bitcoin investors might feel justified in blaming the broader crypto market for dragging BTC down over 20% from its all-time high of $109,000 just five weeks ago. On Tuesday, the flagship cryptocurrency dipped as low as $87,000, caught in the aftermath of a broader market downturn.
The record high came just before the presidential inauguration, amid a speculative frenzy in memecoins. Hype surged after Trump-affiliated tokens were launched, initially skyrocketing before crashing and leaving most traders nursing losses—except for early insiders.
Solana’s SOL, which fueled much of the memecoin boom, has plummeted over 50% since then, leading the decline among major cryptocurrencies.
Bitcoin bulls had hoped for a Strategic Bitcoin Reserve but instead got TRUMP and MELANIA tokens.
Bybit Hack Adds Fuel to the Fire
Even as memecoins collapsed and broader market sentiment weakened, bitcoin held relatively steady, staying within a tight trading range. As recently as four days ago, BTC looked poised to reclaim the $100,000 level.
Then, disaster struck.
The Bybit hack sent shockwaves through the market. While bitcoiners were quick to argue the exploit was linked to Ethereum’s security flaws rather than BTC itself, the incident still triggered a 15% drop in ETH. The sell-off cascaded into the broader crypto market, pulling bitcoin down with it.
Bullish Sentiment Starts to Crack
Longtime bitcoin optimists are now questioning whether the cycle has already peaked.
“Our expectations for this cycle are much higher than $108,000, so we tell ourselves we couldn’t possibly have peaked already,” wrote X user StackHodler on Tuesday. “But the truth is, nobody knows for sure. We just broke below the short-term holder realized price of $92,000… A retest of the 200-day moving average around $82,000 may be needed.”
Standard Chartered’s Geoff Kendrick, who previously predicted BTC could reach $200,000 by year-end, issued a warning:
“DO NOT buy the dip yet, a move to the low $80s is on,” he cautioned. “Before buying becomes attractive, I expect to see a $1B ETF outflow day—the current record is -$583M.”
Rate Cuts Could Be the Catalyst for the Next Bull Run
While crypto has taken the brunt of the sell-off, traditional markets are also struggling. The S&P 500 had its worst week since the Trump inauguration, and the Nasdaq, which peaked in December, is now 5% below that level.
Whether due to new tariffs, aggressive government spending cuts, or cooling investor sentiment, rate markets have taken notice.
The yield on the U.S. 10-year Treasury has dropped from 4.80% before Trump took office to 4.32% today, while expectations for Federal Reserve rate cuts have surged. The probability of a rate cut in May has doubled to 30% in the past week, and the odds of two cuts by June have tripled to 15%, according to CME FedWatch data.
“Lower U.S. Treasury yields are a huge longer-term positive for BTC,” Kendrick concluded.
