Key Insights:
- Bitcoin has no legal pathway for a U.S. government bailout, underscoring its reliance on market driven forces rather than policy support.
- Treasury officials reaffirmed regulatory limits, distancing federal agencies from direct involvement in cryptocurrency price stabilization.
- Analysts remain cautious as macroeconomic risks and deleveraging pressures continue shaping near term market behavior.
The markets of Bitcoin have been under renewed pressure this week, following the confirmation by the U.S. Treasury Secretary, Scott Bessent that the federal government has no powers to interfere in the markets financially. The comments were made at a congressional hearing and supported the old legal limits on state participation in the stabilization of digital asset prices.
The mood of investors was also deepened because traders internalized the message that cryptocurrencies were not going to get emergency assistance during crises and hard currency periods. This announcement came at a time when digital assets were already experiencing a weak cycle, further accelerating the negative price action of key tokens and associated risk markets.
Treasury confirms no Bitcoin bailout powers
In one of the House Financial Services Committee sessions, legislators raised doubts over the ability of federal agencies to use taxpayer funds to facilitate crypto markets.A direct question put in by California Representative Brad Sherman was whether the Treasury Department or the Financial Stability Oversight Council could intervene in case of extreme drawdowns.
Bessent responded clearly, stating that neither role grants authority to purchase digital assets or compel banks to invest in them.He added that any comparison to crisis era bailouts was misplaced, as current law provides no mechanism for similar intervention.
The Treasury Secretary clarified that assets held by the government were obtained through seizures and legal forfeitures, not policy driven acquisitions. Those holdings, initially valued near $500 million, have reportedly appreciated significantly while remaining under custodial control.
Bitcoin extends losses amid policy clarity
Based on the testimony, the price of Bitcoins dropped by almost 8% in a period of 24 hours, which is the height of wider selling. The largest cryptocurrency in the world has fallen to a level of less than the $73,000 mark, its lowest point since the beginning of November of 2024.
Players in the market have blamed macroeconomic uncertainty, stricter financial markets, and smaller risk appetite as the reasons that have fuelled the prolonged fall. The sell off was aggravated by remarks of highly ranked investors who cautioned of more liquidation cycles when the weakness continued.
Michael Burry breathed life into an early warning that digital assets were largely speculative assets that had no defensive properties of a traditional inflation hedge.His statements contributed to bearishness that was already accumulating due to months of whale selling and unwarranted deleveraging of trading sites.
Market sentiment weakens as risks multiply
Bitcoin pressure and political trends also concurrently included the nomination of Kevin Warsh to head the Federal Reserve by President Donald Trump. The possible appointment was interpreted by the markets as hawkish, which strengthened the assumptions of tightening monetary policy and liquidity support.
Other large tokens crumbled with the rest of the crypto market, an event of stress that was not only asset specific or sector specific.There was flow information indicating that investors focused on minimizing risks more than on setting up a rebound, observed by 10 times research analysts.
Technical indicators approached extreme levels, yet strategists warned that the prevailing downtrend remains intact without a clear catalyst. Fundstrat’s Sean Farrell identified the mid $70,000 range as a logical support zone based on historical price behavior.
He proposed that recent capitulation enhanced near term risk reward dynamics, however, he recommended small exposure in the face of continuing macroeconomic uncertainty. The traditional markets were identified as having been unstable over the past few weeks, which is a possible spillover risk to digital assets in the near future.
