The cryptocurrency market experienced a sharp downturn late Thursday, driven by a confluence of geopolitical tensions and macroeconomic uncertainty, even as the industry received verbal support from former U.S. President Donald Trump. Bitcoin (BTC) led the decline, breaking below the key psychological level of $106,000 before staging a minor recovery. As of the latest readings, the BTCUSDT pair was trading at approximately $108,485.32, marking a 24-hour high of $108,746.16 and a low of $107,152.50. The sell-off was triggered by renewed fears over international trade and conflict. President Trump's threats of new tariffs and heightened rhetoric surrounding potential Israeli military action against Iran sent ripples through risk assets. While traditional stock markets managed to absorb the pressure and close with modest gains, the digital asset space was not as resilient, highlighting the sector's current sensitivity to global risk-off sentiment.

Trump Pledges Favorable Crypto Framework Amid Market Turmoil

Earlier in the day, the market had a more optimistic tone following remarks from Donald Trump at Coinbase's State of Crypto Summit. In a pre-recorded video, Trump positioned himself as a staunch ally of the digital asset industry, vowing to end what he termed his predecessor's "war on crypto." He promised his administration would work towards establishing "clear and simple market frameworks" to ensure American dominance in the crypto and Bitcoin space. These comments, delivered to an audience that included key industry figures like Coinbase CEO Brian Armstrong and Circle CEO Jeremy Allaire, signal a potentially significant shift in regulatory posture should he be re-elected. Trump also referenced legislative efforts like the GENIUS Act, aimed at supporting dollar-backed stablecoins. However, this pro-crypto political maneuvering failed to sustain positive momentum as broader market fears took hold later in the day, demonstrating that fundamental geopolitical and economic drivers currently outweigh political promises in the eyes of traders.

Altcoin Sell-Off Deepens as Volatility Spikes

While Bitcoin's dip was notable, the pain was far more acute across the altcoin market. Major tokens including Ether (ETH), Solana (SOL), and XRP (XRP) experienced drops ranging from 5% to 7% during the peak of the sell-off. Ether, trading as ETHUSDT, fell significantly before finding support, later trading around $2,503.84. Its 24-hour range between $2,414.29 and $2,522.57 illustrates the intense volatility traders navigated. Similarly, Solana (SOLUSDT) was seen at $152.53 after a turbulent session that saw its price fluctuate between $149.50 and $154.64. The ETH/BTC pair, a key indicator of altcoin market strength relative to Bitcoin, showed some resilience, trading at 0.02321, but the overall market sentiment was decidedly bearish for assets further down the risk curve. The broad-based nature of the decline suggests traders were liquidating positions across the board rather than rotating capital, a classic sign of a flight to safety, which in the crypto world often means a flight to stablecoins or out of the market entirely.

Macroeconomic Data Presents a Silver Lining

Despite the bearish price action, there are underlying economic indicators that could signal a future tailwind for cryptocurrencies. The market continues to grapple with a Federal Reserve that appears committed to a hawkish monetary policy. However, recent data may force a change in stance. Thursday brought two such data points: May's Producer Price Index (PPI) came in softer than expected, and initial jobless claims unexpectedly remained high at 248,000, matching the previous week's multi-month peak. Furthermore, continuing jobless claims rose for the third consecutive week to 1.956 million, the highest level since November 2021. This weakening economic data, coupled with President Trump's public pressure on Fed Chair Jerome Powell to cut rates, could build a case for an earlier-than-expected monetary pivot. For traders, this creates a complex environment: short-term price action is dictated by fear, but the medium-to-long-term outlook could become increasingly bullish if the Fed is forced to ease policy to support a flagging economy, a scenario that has historically been very positive for assets like Bitcoin.