Bitcoin Faces Bear Fears as Fed Stagflation Warnings Mount

Bitcoin Faces Bear Fears as Fed Stagflation Warnings Mount

In Summary

  • Bitcoin fell after a Bybit exchange hack and mounting stagflation fears
  • Economists warn of potential stagflation, which could dampen crypto market growth
  • The Fed may hold off on interest rate cuts in March due to inflationary concerns
  • Bitcoin remains below $100,000, with analysts expecting a major price shift soon


Catenaa, Wednesday, February 26, 2023- Bitcoin price briefly spiraled downward on Friday (21) after the news broke of a significant hack at Dubai-based exchange Bybit. Mining stocks also saw a drop following the Bitcoin’s price drop.1

Bitcoin dropped below $90,000 on Tuesday (25) for the first time in over a month amid a broad cryptocurrency selloff. 2

The decline, reaching $89,000, follows a series of setbacks, including the largest-ever hack at Bybit and a scandal involving Argentina’s President Javier Milei.

While the market showed signs of recovery, mounting fears of economic instability resurfaced, as US economists raised warnings about the possibility of stagflation, which could impact the cryptocurrency market.3

Meanwhile, another report said that the cryptocurrency market capitalization fell to around $2.86 trillion Tuesday, approaching levels last seen in November 2021, according to CoinMarketCap. 

A recent survey conducted by Bank of America revealed that expectations for stagflation—defined by below-average growth and higher-than-expected inflation—are at their highest level in seven months.

Analysts are now focusing on the potential ripple effects on risk assets, including Bitcoin. Stagflation could impair consumer demand while limiting the Federal Reserve’s ability to maneuver, with the central bank’s key focus shifting to managing inflation. 

This shift in focus has caused tensions within the Federal Reserve as well.

After initiating an interest rate cutting cycle in September, the Fed has paused its easing measures, raising concerns about the future trajectory of inflation and the broader economy.

Despite these concerns, experts maintain that the risk of an immediate crash in Bitcoin’s price remains low.

Sources
  1. theblock.com: https://www.theblock.co/post/343269/bitcoin-mining-stocks-bitdeer-and-cipher-plummet-after-2024-earnings-show-continued-headwinds-to-profitability[↩]
  2. bloomberg.com: https://www.bloomberg.com/news/articles/2025-02-25/bitcoin-slides-below-90-000-as-crypto-selloff-gathers-steam[↩]
  3. Forbes.com: https://www.forbes.com/sites/digital-assets/2025/02/24/serious-fed-warning-sparks-bitcoin-price-crash-fear/[↩]
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