Bitcoin Drops Below 115,000 USD as Trump Escalates Nuclear Tensions and Causes Fed Instability

Bitcoin has fallen sharply to $113,164 on Friday, losing nearly 8% in just a few hours and causing over $200 million in liquidation. This drop coincides with the drastic political moves of former President Donald Trump and in the context of rising geopolitical tensions between America and Russia. The strong downturn in the market reflects the increasing anxiety of investors as Trump returns to the political arena with controversial foreign policy statements and attacks on U.S. economic institutions. Trump orders to reposition submarines amid tensions with Russia Trump's latest post on Truth Social revealed a major military action: he ordered the movement of two nuclear submarines amid threats from Dmitry Medvedev, the Deputy Chairman of the Russian Security Council. Medvedev dismissed Trump's request to end the war in Ukraine within ten days, considering it a "step towards war." Trump responded, stating that there are now "unintended consequences" as military assets are being moved. The market quickly reacted to the escalation, with Bitcoin leading the fall. Risk assets stagnated as the prospect of renewed nuclear tensions raised concerns among global investors. Trump criticizes Fed's data and jobs before the election In a series of separate posts, Trump accused Labor Commissioner Erika McEntarfer of distorting employment figures to boost the chances of Vice President Kamala Harris in the 2024 election. He called for her dismissal and referred to these numbers as "falsified." Trump also criticized Fed Chairman Jerome Powell, calling him "a stubborn FOOL" and demanded an immediate interest rate cut. He urged the Federal Reserve (Fed) to find a way to overcome Powell's control, an unprecedented proposal that breaks the independence of the central bank for decades. Fed Governor Adriana Kugler resigns, paving the way for Trump Amid growing political pressure, Federal Reserve Governor Adriana Kugler resigned on Friday. Although she did not provide a specific reason, her early resignation has left an important position at the central bank - a position that Trump may likely appoint. Kugler, who was appointed by Biden and is a strong advocate for interest rate stability, did not participate in this week's policy vote. Her resignation further increases instability at a time when the credibility of institutions is being threatened by high-level positions. Bitcoin in the crosshairs of political and market instability The sharp decline of Bitcoin reflects the market's risk-averse sentiment amid global instability. Currently, the price of Bitcoin has fallen 7% from its all-time high of 123,182 dollars, achieved a few weeks ago. Analysts point out that the tightening futures premium and the reduction in leveraged activity are signs that the upward momentum is weakening. Contrary to expectations that Bitcoin would be a safe haven in the context of political conflict, this asset has followed the trend of technology stocks, contrary to the view that it is a safe haven. Investors are now shifting towards short-term bonds and cash. Gold also holds steady at around $3,350, but even this price does not bring much comfort. Dalio reassesses Bitcoin amid concerns about America's public debt In the midst of chaos, some long-term investors are reconsidering the outlook for Bitcoin. Ray Dalio, the founder of Bridgewater Associates, currently recommends allocating up to 15% of an investment portfolio to Bitcoin or gold as a hedge against inflation and debt. "America is entering a debt spiral," Dalio warns, referring to the Treasury's forecast of $12 trillion. While cautious about the volatility of Bitcoin, he acknowledges its developing nature as a store of value. Conclusion The fact that Bitcoin has fallen below $115,000 is not just a matter of price volatility - it is also a sign of a larger wave of investor flight due to political instability and economic uncertainty. As Trump reshapes the narrative around nuclear policy and the integrity of the economy, the future trajectory of Bitcoin will be determined not only by charts but also by politics.