Bitcoin Tumbles to Two-Month Low as Fed Chair Uncertainty Rattles Crypto Markets
Bitcoin slid to a two-month low on Friday, extending its recent losses and heading for its fourth consecutive monthly decline—the longest losing streak in eight years. The flagship cryptocurrency dropped 2.5% to approximately $82,300, reflecting broader weakness across the digital asset space.
Market-Wide Crypto Decline Amid Dollar Strength
Other major cryptocurrencies followed Bitcoin's downward trajectory. Ether, the second-largest digital asset, also fell to a two-month low, trading 2.9% lower at $2,735.48. The decline occurred as speculation grew about potential changes in US Federal Reserve leadership, which pushed the dollar higher and weighed on risk-sensitive assets like cryptocurrencies.
Analysts note that cryptocurrencies have lacked clear momentum since last year's sell-off, lagging behind the strong rallies seen in gold and equities—assets they had previously moved in tandem with during certain market phases.
Fed Chair Speculation Drives Risk-Off Sentiment
The crypto market's struggles come despite earlier optimism about strong inflows and a more supportive regulatory environment under President Donald Trump. According to market observers, the decline followed a broader global risk-off move triggered by weak tech earnings and a sudden pullback in gold and silver after both reached record highs.
"Bitcoin trading above the $81,000 level reflects a broader phase of consolidation across the crypto market," said Avinash Shekhar, Co-Founder and CEO of Pi42. "Ethereum and XRP are also seeing muted momentum in the near term, though Ethereum continues to find support from sustained on-chain activity and institutional interest."
Selling pressure intensified amid growing speculation that former Federal Reserve Governor Kevin Warsh could be named by Donald Trump as the successor to current Fed Chair Jerome Powell. Warsh has advocated for a major shift in the central bank's approach, including pushing for a leaner Fed balance sheet.
Technical Outlook and Investor Guidance
Cryptocurrencies such as Bitcoin have typically benefited from an expansive Fed balance sheet, often rallying when the central bank injects liquidity into money markets—a backdrop that supports riskier, speculative assets. The uncertainty around Fed chairmanship has created speculation about a more hawkish outcome than some investors had hoped for.
"Uncertainty around Fed chairmanship has stirred speculations of a more hawkish outcome than some had hoped for, pushing investors into a risk-off mindset and adding pressure on crypto prices," explained Nischal Shetty, Founder of WazirX.
Regarding the technical outlook, Riya Sehgal, Research Analyst at Delta Exchange, noted: "Short-term momentum stays bearish. If BTC and ETH hold key supports near $80,000 and $2,700, the market may stabilise as volatility cools."
Expert Recommendations for Crypto Investors
In light of the heightened volatility, Avinash Shekhar of Pi42 recommended that investors focus on staggered allocations in the crypto market. "Investors should focus on staggered allocations, avoid overleveraged positions, and use this phase to reassess portfolio balance rather than reacting emotionally to short-term price swings," Shekhar advised.
The current market conditions highlight the importance of careful portfolio management and risk assessment in the volatile cryptocurrency space. Analysts believe the recent drop was driven mainly by futures deleveraging rather than sustained spot selling, suggesting the market may find stability if key support levels hold.
