What changed in just three months to push Bitcoin from $109K to $82K? Was it just inflation data, or is something bigger happening behind the scenes?

Just three months ago, the atmosphere in the crypto market was electric. Bitcoin (BTC) had surged past $109,000, Ethereum (ETH) was holding strong

Just three months ago, Bitcoin (BTC) was setting a new all-time high at $109,000, Ethereum (ETH) was holding strong above key levels, and a fresh wave of optimism swept through the crypto market. Pro-crypto Donald Trump had returned to the White House, and the macroeconomic backdrop was setting the stage for another year of bullish gains.

But as Q1 2025 comes to a close, that optimism has quietly faded into uncertainty.

Bitcoin is currently trading around $82,000, marking a nearly 13% drop for the quarter and putting it on track for its weakest Q1 performance in seven years. To put that into perspective, Bitcoin jumped 72% in Q1 2023 and climbed another 69% in Q1 2024. The last time it faltered this badly in the first quarter was in 2018, when it plunged nearly 50% during the fallout of the ICO boom.

This year, however, the majority of Bitcoin’s gains were wiped out in March alone, largely driven by a combination of inflation worries, fragile investor confidence, and intensifying geopolitical risks.

According to Chainalysis, most of the recent sales have come from short-term holders — those who have bought Bitcoin within the past five months and are now reacting to price swings. Long-Term Holders (LTHs) — investors holding for more than 155 days — appear to be the main source of the current profit-taking activity.

According to Glassnode, LTHs remain in profit overall, while SHTFs are currently at a loss on average.

According to Benzinga, U.S. core inflation rose slightly more than expected in February, remaining sticky and keeping the Federal Reserve on track to pause rate hikes at its March meeting.

The year-over-year increase in the Personal Consumption Expenditures (PCE) Index came in at 2.8%, edging past the Dow Jones survey of economists for a 2.7% gain.

The Core PCE Price Index, excluding volatile food and energy components, rose by 0.2% in February. Economists had anticipated a flat reading.

The gains in both headline and core PCE were in line with the prior month's increases.

While the inflation readings may appear small, they are closely watched by the Fed as it strives to cool inflation to its 2% target.

The sticky inflation numbers suggest that the Fed may hold off on cutting interest rates this year, a move that could put pressure on stock markets already grappling with rising trade tensions.

Earlier this week, the Trump administration unveiled fresh 25% tariffs on Canadian and Mexican goods, sparking immediate backlash from both nations.

Canada is preparing to hit back with CAD 60 billion in retaliatory duties on U.S. goods, aiming to match the total value of U.S. exports to Canada in 2022.

The move follows President Donald Trump’s announcement of 20% tariffs on all Chinese imports, driven by allegations of Beijing’s role in fentanyl trafficking.

The administration has also listed around 15 countries — dubbed the “Dirty 15” — that could face reciprocal tariffs based on imbalances and friction in trade and investment.

According to the Office of the Trade Representative (USTR), the U.S. goods trade deficit with Canada was $52.3 billion in 2022, while the trade deficit with Mexico reached $12.4 billion.

Together, the three North American nations are planning tariffs on billions of dollars in goods from the other country.

The U.S. is preparing to impose 20% tariffs on about $70 billion worth of Chinese goods in response to what the administration claims is China’s role in the production and trafficking of fentanyl into the U.S.

In response, China is considering tariffs on American agricultural exports, reported Bloomberg, citing three people familiar with the matter.

The move is part of China’s effort to retaliate against the U.S. tariffs.

Earlier this week, Trump said the U.S. is preparing to place tariffs of up to 20% on all Chinese goods sold in the U.S. in response to the fentanyl crisis.

The president added that the tariffs could be implemented as early as next week.

The administration is also planning to impose tariffs on steel and aluminum imports from several countries, including Canada and Mexico, in an effort to protect American jobs and industries.

According to a report by the Peterson Institute for International Economics, tariffs have a limited impact on the trade deficit.

The report found that the U.S. goods trade deficit fell by an average of 0.1 percentage point of GDP during periods of major tariff increases since 1870.

However, tariffs can have a significant impact on prices