Bitcoin Drops Below $87K as Crypto Market Faces Turmoil, But Rate Cuts Could Spark Next Rally
The macroeconomic landscape is shifting, with falling interest rates potentially laying the foundation for Bitcoin’s next major uptrend.
Bitcoin Plunges 20% Amid Crypto Market Shakeup
Bitcoin (BTC) has tumbled more than 20% from its record high of $109,000 set just over a month ago, hitting a low of $87,000 on Tuesday. The downturn follows a broader crypto sell-off fueled by collapsing memecoin hype, security concerns, and shifting investor sentiment.
The recent volatility stems partly from a speculative frenzy surrounding memecoins, which hit their peak just before the Trump administration’s inauguration. The excitement faded rapidly after the launch of Trump- and Melania-branded tokens, which initially soared but soon crashed, leaving retail investors with steep losses.
Solana (SOL), the blockchain that powered many of these memecoins, has seen its token price plummet more than 50% since that January peak, leading the overall market decline.
Bybit Hack Adds Fuel to the Fire
Bitcoin had been holding relatively steady in recent weeks, even making an attempt to reclaim the $100,000 level. However, the trend shifted sharply after a major security breach at crypto exchange Bybit.
Though the exploit had no direct impact on Bitcoin’s blockchain, the fallout spread to the entire crypto market. Ethereum (ETH) has dropped over 15% since the incident, and panic selling has weighed on BTC as well.
Analysts Warn of Further Weakness Before a Rebound
Despite long-term optimism, some analysts caution that BTC may need to test lower levels before rebounding.
“We don’t want to believe $108K was the cycle top, but we can’t rule it out,” said crypto analyst StackHodler on X. “Bitcoin just dropped below the short-term holder realized price of $92,000, and a move toward the 200-day moving average at $82,000 could be next.”
Standard Chartered’s Geoff Kendrick, who previously projected a $200,000 price target for BTC in 2025, also advised caution.
“A move to the low $80Ks is likely,” Kendrick said. “Before buying the dip becomes attractive, I expect to see at least one day of $1 billion in ETF outflows. The worst day so far saw outflows of $583 million.”
Interest Rate Trends Could Pave the Way for a Bitcoin Comeback
While crypto markets have been hit hard, traditional financial markets are also under pressure. The S&P 500 just suffered its worst weekly performance since Trump took office, and the Nasdaq is down 5% from its December high.
Despite the turmoil, a key macroeconomic factor is turning in Bitcoin’s favor—falling interest rates.
The yield on the U.S. 10-year Treasury has dropped from 4.80% before Trump’s inauguration to 4.32% today, signaling a shift in expectations for monetary policy. According to CME FedWatch, the probability of a Federal Reserve rate cut in May has doubled to 30%, and the chances of two rate cuts by June have tripled to 15%.
“A decline in U.S. Treasury yields is a major long-term bullish signal for Bitcoin,” Kendrick noted.
As financial conditions ease, Bitcoin may find the support needed to reverse its recent downtrend, setting the stage for the next leg of the bull market.
