Bitcoin Faces Pressure Amid Rising Trade Tensions: Critical Levels to Watch
Bitcoin and major cryptocurrencies are under selling pressure due to heightened U.S.-China trade tensions causing new tariffs. Bitcoin fell to $91,000, and Ethereum experienced significant losses. A critical support level for Bitcoin is identified at $92,180, with possible decline to $74,400 if it fails, amidst cautious investor sentiment reflected by decreased futures open interest.
Bitcoin (BTC) and various cryptocurrencies are currently facing increased selling pressure amid escalating trade conflicts between the United States and China, leading to new tariffs being implemented by both nations. Recently, Bitcoin saw a decline to as low as $91,000, alongside major altcoins such as Ethereum (ETH) and Solana (SOL).
The situation worsened as the U.S. instituted a 10% tariff on all imported items from China, prompting China to retaliate with tariffs on specific U.S. goods like oil and liquefied natural gas starting February 10. Additionally, China commenced an investigation into Google LLC concerning alleged antitrust violations, further heightening tensions between these two global powers.
This market volatility has negated any benefits from a small rally that occurred earlier when the Trump administration delayed tariffs on Mexico and Canada. The new tariffs on China had already resulted in considerable declines in cryptocurrency valuations. Investor confidence in high-risk assets has declined significantly, leading to a net withdrawal of $235 million from a set of twelve Bitcoin-focused exchange-traded funds (ETFs) on Monday.
Moreover, there has been a 4% decrease in open interest for Bitcoin futures on the Chicago Mercantile Exchange (CME), signaling a cautious approach from institutional investors. President Donald Trump, noted for his originally pro-cryptocurrency stance, has inadvertently added uncertainty to the digital asset markets.
Despite a surge in cryptocurrencies following Trump’s election, the current environment is marked by geopolitical instability and regulatory challenges. As of now, Bitcoin is trading around $98,970, approximately 13% below its all-time high. Trading volumes for U.S. ETFs that focus on Ethereum reached historical levels on Monday amidst extensive liquidations driven by ongoing trade disputes.
The iShares Ethereum Trust, operated by BlackRock, accounted for nearly half of the $1.5 billion in trading activity among nine ETFs. Ethereum (ETH) saw a plunge of up to 27% on Monday, resulting in over $600 million in liquidations in perpetual futures markets according to Bloomberg data.
Crypto analyst Ali Martinez has indicated that $92,180 is a pivotal support level for Bitcoin, based on Market Value to Realized Value pricing bands. Failure to maintain this support could lead Bitcoin towards a target of $74,400. Despite this downturn, Bitcoin traders maintain an average profit margin of 3.36%.
Historically, local bottoms have been associated with profit margins dipping below -12%, suggesting that Bitcoin may have further downside potential before reaching a true market bottom. Furthermore, the MVRV Momentum indicator has persisted in negative territory since the year’s onset, emphasizing ongoing market weakness.
In conclusion, the cryptocurrency market faces increased volatility triggered by geopolitical tensions and regulatory uncertainties. The performance of Bitcoin and major altcoins remains closely linked to these external pressures. Investors should proceed with caution amid these evolving market landscapes.
The cryptocurrency market, particularly Bitcoin, is currently grappling with intense selling pressure attributed to escalating trade conflicts between the United States and China, which have introduced tariffs that disrupt financial markets. Historical trading behaviors and current market trends indicate that Bitcoin is positioned precariously at critical support levels, making it susceptible to further declines. The attitudes of institutional investors are highlighted by changes in open interest in futures contracts, influencing overall market dynamics.
The current landscape for Bitcoin and other cryptocurrencies illustrates a challenging environment characterized by geopolitical tensions and regulatory complexities. As the market navigates through these issues, crucial support levels like $92,180 become pivotal indicators of potential future price movements. Investors are advised to remain vigilant and informed as market conditions develop further.
Original Source: www.newsbtc.com
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