Bitcoin recovers above $84,000

2 Nisan 2025

Written by: Rania Gule, Senior Market Analyst at XS.com – MENA

Bitcoin has rebounded in recent sessions, surpassing the $84,000 level after declining by 4.29% last week. This raises questions about the sustainability of this recovery amid current economic conditions. In my view, what distinguishes this rebound is the notable increase in Bitcoin’s market dominance, which has reached 61.4% according to Crypto Finance reports. This reflects a clear shift towards Bitcoin as a resilient asset in the face of severe financial market volatility. However, the key question remains: Will this upward momentum persist, or will economic challenges hinder its path?

From a fundamental perspective, Bitcoin is currently benefiting from global economic uncertainty, particularly due to escalating trade tensions triggered by tariffs imposed by former U.S. President Donald Trump. Data suggests that these tariffs could lead to a global economic slowdown and higher inflation rates, potentially driving investors toward hedging assets. However, Bitcoin remains closely correlated with stock markets, making it vulnerable to selling pressure if risk aversion intensifies.

In my opinion, the increasing dominance of Bitcoin in the crypto market signals a more cautious approach by investors, who are gravitating toward relatively stable assets amid the declining performance of alternative cryptocurrencies. While this trend supports Bitcoin, it may also indicate weak market liquidity and a reluctance among investors to inject new capital into highly volatile assets, which could limit Bitcoin’s short-term upside potential.

Institutional movements are playing an increasing role in supporting Bitcoin’s price. Tether, the issuer of the largest stablecoin in the market, recently withdrew 8,888 BTC from Bitfinex’s active wallet, signalling strong demand for Bitcoin. Such institutional withdrawals are often interpreted as a bullish indicator, as they reduce the available supply for open market sales, potentially supporting prices in the short term. However, the crucial question remains: Is this institutional inflow sufficient to counterbalance potential future sell-offs caused by declining risk appetite?

Challenges persist, particularly with growing concerns over stagflation in the U.S. Market reports indicate that Trump’s proposed tariffs could reduce U.S. GDP by 70 basis points and increase inflation by 40 basis points, complicating the Federal Reserve’s monetary policy decisions. If economic pressures continue, investors may shift towards traditional safe havens like gold, which could negatively impact Bitcoin if its correlation with equities remains intact.

Despite these challenges, I believe Bitcoin could emerge as a long-term winner, especially if the Federal Reserve is forced to ease monetary policy in response to economic pressures. If the U.S. economy slows and the Fed reverts to a more accommodative stance, it could weaken the U.S. dollar and drive demand for Bitcoin as a hedge against inflation and declining purchasing power. This scenario could place Bitcoin on a more sustainable upward trajectory, particularly if institutional investors continue increasing their market exposure.

However, despite these potential positives, Bitcoin remains a highly volatile asset, requiring traders to exercise caution in their investment decisions. Given the current market conditions, a strategic accumulation approach—gradually building positions during pullbacks rather than chasing price peaks—may be prudent. Simultaneously, closely monitoring economic developments, particularly Federal Reserve policies and geopolitical events, is essential for informed decision-making.

Bitcoin appears to be at a critical juncture. On one hand, positive factors such as rising market dominance and strong institutional activity support continued recovery. On the other hand, economic and geopolitical challenges pose risks that could hinder sustained upside momentum. As a result, Bitcoin remains in a sensitive position, with its future trajectory depending on the balance between these conflicting factors, making the upcoming periods crucial in determining the long-term direction of the world’s largest cryptocurrency.