On Friday, US President Donald Trump met with Ukrainian President Volodymyr Zelensky to talk about possible ways to put an end to Ukraine’s conflict with Russia.
The discussion’s aftermath had an instant effect on the cryptocurrency markets, as Bitcoin (BTC) was unable to regain the $85,000 mark at the time of writing.
Trump-Zelensky meeting sparks tension in Bitcoin and stock markets
President Donald Trump and Ukrainian President Volodymyr Zelensky’s meeting ended in a verbal sparring match on the Ukraine-Russia conflict, sparking a furious dispute in the Oval Office on Friday.
At the Oval Office, Zelensky was addressed by Trump and Vice President JD Vance regarding his stance on US assistance in the conflict.
Investment markets saw a further decline after the conference. At the time of writing, Bitcoin was trading just around $84,000, remaining range-bound.
Similar trends are being seen in stock markets. The Nasdaq-100 and S&P 500 are now 1,200 and 200 points below their peak values, respectively.
This demonstrates how cryptocurrency and conventional stocks are increasingly correlated.
Trump’s tariff threats against foreign trading partners were a big catalyst for the current sell-offs, but hedge funds have been instrumental in making the drop worse.
These companies have reportedly been unwinding their Bitcoin basis transactions because of low profitability ever since market sentiment began to shift toward risk-off, according to a report from the crypto finance platform Matrixport.
It is hardly surprising that hedge funds are winding down their arbitrage positions given the sharp decline in yield opportunities and the subsequent drop in trading volumes following the December FOMC meeting. The record withdrawals from Bitcoin ETFs, which occur when these funds leave deals that are less profitable, demonstrate this. wrote analysts for Matrixport.
According to them, at least 25% of the capital of Bitcoin ETFs is linked to arbitrage transactions, as these hedge funds collectively own $10 billion in Bitcoin ETFs and have received $39 billion in inflows.
Tracy Jin, the chief operating officer of MEXC, thinks the present correction is a good and necessary stage in a larger bull market cycle, notwithstanding the decline.
“In a bull market, the recent pullback is a good way to release risk. US markets are anticipated to undergo comparable corrections following the early shifts in Bitcoin and altcoins, Jin said.
Jin was upbeat about the state of the market in 2025, saying that the latest decline is similar to what happened in May 2021.
“The current pattern of fall is comparable to the state of the market in May 2021. The market then underwent a sharp decline following a period of steady increase, creating a “major correction” situation. This time, short-term speculative funds may be cleared out by the drawdown, opening the door for a potential recovery,” Jin added.
