Bitcoin's weekend gains vanished as the Federal Reserve warned of a potential recession.

Bitcoin Drops 10% As Recession Seems Near

The price of Bitcoin has shown extreme volatility over the past few days. Last week, the Crypto Fear and Greed Index hit its lowest level since 2022, and Bitcoin looked very bearish due to several key factors.

Yesterday, Trump announced a crypto reserve that caused token prices to pump. However, that forward momentum has completely vanished today.

There are a few reasons that Bitcoin is looking so bearish right now. Essentially, Trump’s announcement may have only slapped a bandage on a very serious wound.

Last week, Bitcoin ETFs had their worst week ever, with $2.7 billion in outflows, as the Federal Reserve Bank of Atlanta predicted a 1.5% GDP decrease. Today, it has become even more pessimistic.

The Fed is now predicting that the US GDP will shrink 2.8% by the end of Q1 2025. From an economic perspective, this is apocalyptic compared to its predictions four weeks ago, which showed 3.9% growth.

Another important factor contributing to Bitcoin’s volatility is President Trump’s proposed tariffs. Some analysts have theorized that they aren’t the main cause, and that’s probably true.

However, the crypto market crashed when Trump recently announced 25% tariffs on the EU, joining ones on Canada, Mexico, and China.

If the US economy enters a recession, however, the downsides of that integration will fully reveal themselves.

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President Trump has officially announced the U.S. Strategic Crypto Reserve, and Bitcoin has jumped to $94,000.

In just three hours, the crypto markets have added over $300 billion in market cap due to the news.

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Crypto Prices Jump After Trump Announces Five Tokens for Strategic Reserve

Crypto prices surged Sunday after President Trump said he would move forward on a U.S. crypto strategic reserve that will include bitcoin and ether, as well as three smaller and riskier tokens.

"A U.S. Crypto Reserve will elevate this critical industry after years of corrupt attacks by the Biden Administration," said Trump in a Sunday post on his social-media platform Truth Social. "I will make sure the U.S. is the Crypto Capital of the World."

Trump said the crypto strategic reserve will also include solana, Ripple-linked XRP and cardano. Unlike bitcoin, which is the largest and oldest cryptocurrency, these tokens were created more recently and often by a small team, making them more susceptible to wild price swings and other risks.

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