Bitcoin's Rollercoaster Week: Ethereum Dips Amid Liquidations and Inflation Concerns

Bitcoin Hits $106,000 Before Tumbling Back

Bitcoin experienced a volatile start to the week, surging to $106,000 before slipping 3.8% to $102,450 within hours on Monday. This dramatic movement led to $178.46 million worth of liquidations in the past 24 hours, according to CoinGlass, with an almost equal split between long and short positions.

The turbulence comes amid broader economic concerns, including inflation warnings from the Federal Reserve and Walmart’s announcement of price hikes due to ongoing trade tariffs. These factors have added pressure to the crypto market, which has seen significant fluctuations in recent days.

Adding to the drama, MicroStrategy, led by Bitcoin advocate Michael Saylor, faced a class-action lawsuit alleging investor misrepresentation. Hours later, the company announced a bold acquisition of $764.9 million worth of Bitcoin, underscoring its unwavering commitment to the cryptocurrency.

Ethereum Tumbles 4.3% Amid Liquidations

Ethereum, the second-largest cryptocurrency, also faced a challenging start to the week, dropping 4.3% from $2,500 to $2,400 on Monday. This decline triggered $264.4 million worth of Ethereum liquidations, with $205.28 million of these being long positions, according to CoinGlass.

The dip follows a strong month for Ethereum, which had been riding a wave of optimism across the crypto sector. However, inflation concerns and the Federal Reserve’s decision to maintain its benchmark interest rate at 4.25% to 4.50% have dampened market sentiment.

Why Inflation and Tariffs Matter for Crypto

The Federal Reserve’s warnings about rising inflation and unemployment risks, coupled with Trump’s tariff policies, have created uncertainty in global markets. Walmart’s decision to raise prices further highlights the impact of these tariffs on consumer goods.

For cryptocurrencies like Bitcoin and Ethereum, these macroeconomic factors play a significant role. Inflation fears often drive investors toward risk-on assets like crypto, but they can also lead to heightened volatility, as seen in this week’s price swings.

Meme Coins Outperform Amid Renewed Risk Appetite

While Bitcoin and Ethereum faced challenges, meme coins have emerged as unexpected winners. Driven by retail enthusiasm and social media virality, these speculative assets have outperformed major Layer-1 tokens, signaling a return of risk-on sentiment in the crypto sector.

Meme coins had previously seen steep corrections following President Trump’s January inauguration, but renewed investor appetite has reignited their momentum. This trend underscores the speculative nature of the crypto market and its ability to defy broader economic pressures.

Bitcoin’s Global Recognition Gains Traction

In a notable development, an Australian judge ruled that Bitcoin is a form of money, potentially exempting it from capital gains tax. This decision could pave the way for broader adoption and regulatory clarity, further solidifying Bitcoin’s status as a global financial asset.

Meanwhile, El Salvador continues to benefit from its Bitcoin holdings, which recently surged in value to over $644 million following a 30 BTC purchase last month. President Nayib Bukele remains bullish on the cryptocurrency, showcasing its potential as a national investment strategy.

What’s Next for Bitcoin and Ethereum?

Despite recent volatility, Bitcoin remains just 5.8% below its all-time high of $108,786, achieved in January. Ethereum, however, is still 50.9% away from its peak of $4,878 in 2021. As inflation concerns persist and global trade dynamics evolve, the crypto market is likely to remain unpredictable.

For young, crypto-curious investors, staying informed about macroeconomic trends and regulatory developments will be key to navigating this dynamic landscape. Whether it’s Bitcoin’s resilience or Ethereum’s potential for recovery, the coming weeks promise to be pivotal for the crypto sector.