Increasing Risk for Bitcoin Price Decline Due to Trade Tariff Uncertainty
Recent assessments of the on-chain options market for Bitcoin (BTC) on Derive.xyz have shown a notable shift, now indicating a 22% chance of prices dropping to $75,000 by March 28. This reflects a significant rise from just a week ago when the likelihood was a mere 10%, coinciding with renewed trade tensions between the United States and key trading partners like Canada, Mexico, and China. Experts warn that these tariff disputes could heighten global inflation worries, adding complexity to the Federal Reserve’s capacity to adjust interest rates.
Derive reports that the recent implementation of import tariffs by the Trump administration — 25% on goods from Mexico and Canada and 10% on Chinese imports — is likely to contribute to escalating inflation rates, shaking investor confidence in crypto markets. Andre Dragosch, head of Europe at Bitwise, remarked, “These tariffs are causing significant disruptions in the markets, especially in terms of their impact on USD strength and the overall constriction of the global money supply.”
Recent data from CoinDesk indicates that Bitcoin has already seen an 11% drop, plummeting to $93,700 in just four days. Additionally, Ethereum (ETH), the second-largest cryptocurrency by market capitalization, dipped below $2,200 earlier this week, marking its lowest point since early August.
Industry analysts suggest that BTC might be nearing the completion of a double top reversal pattern, signaling the potential for further decline towards the $75,000 threshold. Notably, Arthur Hayes, chief investment officer at Maelstrom and former BitMEX CEO, recently shared his expectation of a dip to approximately $75,000 before a potential significant upward trend could materialize.
Despite the challenging circumstances, the overall market sentiment appears cautiously positive. Derive points to the surge in active spot ETF applications for various digital assets such as DOGE, SOL, XRP, and LTC, spearheaded by major players like Bitwise and Grayscale. If these filings receive approval from the SEC, it could boost credibility in the digital asset sector, attracting fresh investment and potentially driving up prices.
Dragosch underscores the possibility of Federal Reserve intervention, suggesting that the central bank might need to reintroduce quantitative easing (QE) to stabilize asset values. He noted, “At some stage, the Fed may need to intervene to prevent excessive appreciation of the dollar, which would alleviate tightening financial conditions and support global economic growth.”
To sum up, the confluence of geopolitical trade tensions, inflation concerns, and market dynamics points to a delicate period for Bitcoin and the wider cryptocurrency market. While the specter of a descent to $75,000 lingers, advancements in ETFs could alleviate some concerns, offering a glimmer of hope for market revival. With ongoing developments, market participants must remain alert and adaptable to these economic indicators.
