Bitcoin Faces Major Selloff Amid Trade Tensions
Bitcoin’s recent downturn has intensified, reflecting a broader market retreat from riskier assets following U.S. President Donald Trump’s tariff announcements. The cryptocurrency, which had reached an all-time high just weeks ago, has seen a significant decline, raising concerns among investors about its future trajectory.
Bitcoin’s Sharp Decline
In a dramatic turn of events, Bitcoin plummeted by as much as 7.2% on Friday, dropping to $78,226. This decline marks a staggering 28% decrease from its peak of $109,241, achieved less than six weeks prior. February alone saw Bitcoin fall approximately 18%, representing its largest monthly drop since June 2022. Zaheer Ebtikar, co-founder of Split Capital, noted that many large investors decided to exit the market, contributing to the heightened selling pressure. Despite the sharp drop, Bitcoin managed to stabilize somewhat by the end of the trading day.
Traders are now closely monitoring Bitcoin’s performance against key technical indicators. The cryptocurrency has fallen below its 200-day moving average for the first time since October, a significant marker that could signal further declines or potential recovery. Additionally, its 14-day relative strength index has dipped into oversold territory, suggesting that some investors may see this as an opportunity to buy at lower prices.
Impact of Trump’s Tariff Threats
The recent selloff in Bitcoin coincides with President Trump’s announcement of new tariffs on imports from Canada, Mexico, and China. Effective March 4, these tariffs have heightened fears of escalating trade tensions, prompting a broader risk-off sentiment across global markets. As a result, most Asian stock markets experienced declines, with cryptocurrencies being particularly vulnerable to shifts in investor sentiment.
The uncertainty surrounding Trump’s trade policies has led to a reevaluation of Bitcoin as a viable investment. Initially, many investors viewed Bitcoin as a safe haven amid Trump’s crypto-friendly stance. However, the current geopolitical climate has shifted perceptions, leading to increased caution among traders.
The Future of Bitcoin and Investor Sentiment
As Bitcoin’s value continues to fluctuate, investors are left contemplating how low the cryptocurrency might go. Analysts suggest that there is a support level around $70,000, but caution that this threshold may only hold if negative sentiment persists in equity markets. Ruslan Lienkha, chief of markets at YouHodler, emphasized that the current market dynamics are heavily influenced by broader economic conditions.
In February, U.S. spot Bitcoin exchange-traded funds (ETFs) experienced a record outflow of $3.3 billion, marking the largest monthly withdrawal since their inception. This trend reflects a growing preference for safer assets amid rising geopolitical tensions and inflation concerns. Despite the challenges, some positive developments have emerged for the cryptocurrency sector. Trump has made appointments of crypto advocates to key positions and has expressed intentions to position the U.S. as a leader in the cryptocurrency space. However, traders are still awaiting concrete actions that could bolster confidence in Bitcoin and the broader crypto market.
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