Wosh ends the "dollar depreciation trade"? The cryptocurrency market continues to plummet over the weekend, with Bitcoin falling below the $80,000 mark

The cryptocurrency market faced a new round of sell-offs over the weekend, with Bitcoin dropping below the $80,000 mark to its lowest level since April last year, continuing a month-long downward trend. This sell-off, which began after Trump nominated Waller for the position of Federal Reserve Chairman, not only severely impacted cryptocurrencies but also reversed the upward momentum of gold and silver, as market bets on the depreciation of the dollar are unraveling.

In a context of thin liquidity and limited buying interest, Bitcoin's decline reached 10% on Saturday, hitting a low of $75,709.88. Other major tokens like Ethereum and Solana saw even steeper declines, dropping 17% and over 17%, respectively. According to CoinGecko data, the total value of the cryptocurrency market evaporated by approximately $111 billion in the past 24 hours.

This decline occurred against a backdrop of thin liquidity and limited buying interest, causing the drop of the world's largest cryptocurrency to exceed 30%. Market tracking agency Coinglass reported that around $1.6 billion in long and short positions were liquidated during the same period, with most occurring in the last four hours, primarily concentrated in Bitcoin and Ethereum.

The news of President Trump nominating Waller as the next Federal Reserve Chairman seems to have exacerbated the decline in cryptocurrencies. According to a previous article by Wall Street Insight, former Goldman Sachs executive Gavyn Davies stated that choosing Waller reduces the risk of a "sell America" trade-induced crisis, as he is expected to firmly guard against inflation.

Expansion of Liquidation Scale, Low Retail Interest

According to market tracking agency Coinglass, approximately $1.6 billion in long and short positions were liquidated in the past 24 hours, with most occurring in the last four hours, primarily concentrated in Bitcoin and Ethereum.

After closing at $83,817 on Friday, Bitcoin had dropped to $78,092 by Saturday evening, a decline of 7%. This drop returned to levels seen after April 25, continuing weeks of macro-level disappointment.

Needham analyst John Todaro stated, "The current levels show that retail investor interest is extremely low," adding that trading volumes may remain subdued "for the next one to two quarters." Continuous outflows from spot ETFs further confirm the decline in investor interest.

Safe-Haven Properties Ineffective, Gold and Silver Become Preferred Choices

Davies, a former chief economist and partner at Goldman Sachs, stated that Waller's policy mix may be welcomed by market participants, but he hopes to reduce the Federal Reserve's role in the market, which means he may be less willing to intervene during stock market turbulence. "Many market observers would like this combination—smaller balance sheets while the banking system is more deregulated." Co-founder and Chairman of Fukan Asset Management, Gavyn Davies, who is also the head of the London office, stated in a video released on the company's official website:

"Including the dollar, the market will clearly breathe a sigh of relief. Choosing Waller reduces the risk of a 'Sell America' trade that could truly trigger a crisis."

Despite the dollar weakening for most of January this year and investors becoming increasingly wary of the policy risks of the Trump administration, this change has not boosted sentiment in the cryptocurrency market. Similarly, when gold prices soared to historic highs, Bitcoin also failed to respond meaningfully.

Louis Navellier of Navellier & Associates stated, "Silver and gold have become tools for investors worried about fiat currencies." After a significant pullback in gold and silver on Friday, Bitcoin also failed to attract inflows. Traditional safe-haven funds remain concentrated in metals and cash.

This lack of buying highlights the dilemma of Bitcoin's role in a broader investment portfolio. Geopolitical risks have failed to spur demand, and Bitcoin's dual positioning as a momentum trade and a hedge against currency devaluation is now struggling on both fronts.

Geopolitical Tensions and Regulatory Uncertainty

Bitcoin prices may also be affected by the escalating tensions between Israel and Iran. According to Xinhua News Agency, Trump stated that the U.S. and Iran are negotiating, and an advisor to Iran's Supreme Leader indicated that a "negotiation framework" is being formed. Earlier on January 31, social media was flooded with rumors of the assassination of the commander of the Iranian Islamic Revolutionary Guard Corps, drone attacks on naval bases, and explosions occurring in multiple locations. Iranian media refuted these claims one by one, stating that the related assertions were untrue.

Additionally, the delay in new market structure regulations for the U.S. cryptocurrency industry has also weakened interest in digital assets. The market had hoped that regulatory clarity would boost confidence, but the Senate committee shifted its focus to housing issues, leading to a delay in cryptocurrency legislation.

It is noteworthy that although Waller has referred to Bitcoin as a "good asset" and "a good cop for policy," the news of his nomination seems to have reversed the strong upward momentum in gold, silver, and cryptocurrencies. The market expects that Waller may wish to reduce the Federal Reserve's role in the market, which means he may be less willing to intervene during periods of stock market turbulence