The cryptocurrency market experienced a bout of intense volatility, initially rallying on fiscal policy commentary before succumbing to broader risk-off sentiment. Bitcoin (BTC) demonstrated this turbulence clearly, first climbing on statements from President Donald Trump that were perceived as bullish for hard assets. As of 22:22 UTC on Sunday, BTC was trading at $107,937, a modest 0.54% gain over 24 hours. The price action was choppy, with Bitcoin oscillating between a low of $107,194 and a high of $108,489. The initial optimism was sparked by a post on Truth Social where Trump addressed his party's fiscal conservatives, stating, “We will make it all up, times 10, with GROWTH, more than ever before.” This message, aimed at easing concerns over a proposed $3.8 trillion tax cut package, signaled a strategy reliant on aggressive economic growth to offset rising deficits.

This fiscal approach immediately resonated with crypto and gold investors. Crypto analyst Will Clemente noted on X, “How can you read this and hold long term US treasuries at current yields lol... Also, how can you read this and not hold any Bitcoin or gold.” His comments capture the market's interpretation: a loose fiscal policy, potentially leading to increased national debt and currency debasement, strengthens the investment case for scarce, inflation-resistant assets like Bitcoin. Traders who share this view see BTC as a hedge against the potential long-term devaluation of fiat currencies, a narrative that gained traction following the announcement. Technical analysis from the period of June 28 to June 29 showed strong support forming around the $107,300 level, with trading volume peaking at 7,538 BTC, confirming the initial upward momentum as traders bought into the inflation hedge narrative.

Crypto Market Reverses as Geopolitical Risks Mount

The bullish sentiment proved to be short-lived. Later in the week, the market took a decisive turn downwards as geopolitical and economic fears overshadowed the fiscal policy debate. Bitcoin slumped more than 2.5% to trade at $105,900, wiping out its earlier gains. The selloff was even more pronounced across the altcoin market, where major tokens like Ether (ETH), Solana (SOL), XRP (XRP), and Dogecoin (DOGE) posted sharp declines ranging from 5% to 7%. This downturn was fueled by renewed threats of trade tariffs from President Trump and escalating tensions in the Middle East concerning Iran's nuclear program. Trump warned of a “chance of massive conflict,” urging Americans in the region to leave, which sent a wave of fear through global risk assets.

Economic Weakness vs. Fed's Hawkish Stance

Interestingly, while traditional markets like U.S. stocks managed to recover from the initial shock and close with modest gains, the digital asset class remained under pressure. This divergence highlights crypto's sensitivity to global liquidity and risk perception. The market's recent rally has occurred despite a U.S. Federal Reserve that appears reluctant to cut interest rates. However, emerging economic data may force a policy shift. Thursday's data points were particularly telling: May's Producer Price Index (PPI) was softer than expected, and initial jobless claims unexpectedly remained high at 248,000. Furthermore, continuing jobless claims rose for the third consecutive week to 1.956 million, the highest level since November 2021. This economic softening, combined with President Trump's continued public pressure on Fed Chair Jerome Powell, creates a complex environment for traders. While the immediate price action for BTC, ETH, and SOL is bearish, the underlying economic weakness could eventually lead to a more dovish Fed, a scenario historically bullish for cryptocurrencies. Current market data shows BTC has since recovered to around $108,637, ETH to $2,508, and SOL to $152, underscoring the market's reactive and volatile nature.