Cryptocurrency Market Experiences Volatility Amid Policy Developments

According to PANews, the cryptocurrency market witnessed significant fluctuations last Thursday evening, with major currencies like Bitcoin and Ethereum experiencing rapid ups and downs within hours. Altcoins showed varied trends, with some doubling in price before a slight pullback, while others hit new lows. The volatility was partly driven by positive developments in U.S. cryptocurrency policy, though differing interpretations of these updates led to market instability. A key factor was U.S. Senator Cynthia Lummis, who hinted at significant news before the U.S. stock market opened, leading to speculation about the potential approval of a Bitcoin strategic reserve proposal. This caused Bitcoin to surge over 2.5% in 15 minutes. However, the excitement was short-lived as Lummis was merely confirmed as the chair of the Senate Banking Digital Assets Subcommittee, causing Bitcoin to drop over 3% shortly after. Despite the initial drop, Bitcoin's price rebounded, nearing $107,000, as investors reassessed the potential benefits of Lummis's new role. Further market movements were influenced by U.S. President Donald Trump's latest executive order on cryptocurrency, which supported responsible growth in the crypto industry and proposed a national digital asset reserve while prohibiting government-issued CBDCs. Although the policy was generally seen as positive, uncertainties about its implementation led to mixed market reactions, with Bitcoin failing to break previous highs and eventually dipping to around $102,000. Data from Coinglass indicated a significant decrease in the value of open contracts in the derivatives market, despite minimal overall price change, as many investors faced losses. Following Thursday's volatility, Bitcoin saw another rise during Friday's U.S. trading hours but quickly retreated after reaching $107,000 again, stabilizing around $104,000 to $105,000 over the weekend. With Trump's administration expected to provide unprecedented policy support for the Web3 industry, there is potential for price increases. However, the repeated resistance near $107,000 suggests investors should be cautious of short-term corrections. Bitcoin's price has remained between $90,000 and $110,000 over the past few months, indicating the market may need new catalysts to determine its direction. While Trump's presidency could benefit the Web3 sector, Bitcoin and other cryptocurrencies remain susceptible to macroeconomic changes. The impact of Trump's policies on the U.S. and global economy, and whether his promises will be fulfilled, remains to be seen. Investors should be wary of extreme scenarios similar to the 2021 market crash, despite Bitcoin's potential for reaching new highs.