By Chris Hollingworth 
Bitcoin’s volatility reached 3.6% on March 19, marking its highest level since August 2024, as reported by CoinGlass. This surge in volatility reflects increased market uncertainty due to structural unknowns in the US economy, according to Uldis Tearudklans, the chief revenue officer at UK-based cryptocurrency exchange Paybis.
Tearudklans highlighted the evolving policy landscape, particularly with the establishment of Elon Musk’s Department of Government Efficiency. While the initiative to trim government spending enjoys bipartisan support, the broader economic impacts, such as effects on employment and consumer demand, pose challenges in terms of quantification.
The Department of Government Efficiency claims to have saved an estimated $115 billion for the US government by March 19 through various measures like reducing the workforce, selling assets, canceling grants, and achieving regulatory savings.
According to Tearudklans, if fiscal tightening aligns with stable or gradually decreasing interest rates, the resulting liquidity squeeze could create a policy mismatch, potentially curtailing the stimulative effects of future rate cuts.
On the same day, the Federal Open Market Committee announced its decision to keep interest rates unchanged for the time being, while hinting at the possibility of two more rate cuts in 2025.
Bitcoin’s volatility has been prominently visible since the inauguration of US President Donald Trump in January 2025. After peaking at $109,590 on January 20, the price of BTC experienced a 30% pullback, dropping to $77,041 during the week of March 9-15. The selling pressure intensified as short-term investors found themselves in a loss, though there are signs of renewed demand as the cryptocurrency rebounded to around $84,000 at the time of writing.
Tearudklans explained that the heightened volatility suggests traders are factoring in various potential outcomes, including the prospect of fiscal contraction alongside steady or easing interest rates. This dynamic could lead to a feedback loop where reduced government spending constrains growth, potentially compelling the Fed to maintain a cautious stance or postpone future rate cuts.
Furthermore, Bitcoin’s price movements might also be influenced by policy discordances. Tearudklans noted that while the Fed’s interest rate decision provides short-term clarity, the broader fiscal landscape introduces the risk of lopsided market reactions, reinforcing Bitcoin’s sensitivity to macroeconomic cycles and liquidity shifts.
Bitcoin’s volatility coincides with Trump’s recent engagement with the crypto community. On March 7, he signed an executive order to establish a strategic Bitcoin reserve and digital asset stockpile in the US. Speaking at the 2025 Digital Asset Summit on March 20, Trump proclaimed the US would emerge as a “Bitcoin superpower.” However, Trump’s discussions on tariffs and escalating geopolitical tensions are reverberating across financial markets, including the cryptocurrency space.
For more insights on the cryptocurrency market, check out X Hall of Flame’s feature on Benjamin Cowen’s analysis predicting a decline in Bitcoin dominance in 2025.
