Despite the 2.2 % Bitcoin gains on April 1, BTC (BTC) has not traded over $ 89,000 since March 7. Although twice the last price is often associated with the UK’s escalating global trade war, many factors have already advanced the morale of investors a long time before President Donald Trump announced the definitions.
Some of the market participants Claim This strategy is of $ 5.25 billion of Bitcoin purchases since February is the main reason that BTC holds above the support of $ 80,000. However, regardless of whoever buys, the truth is that Bitcoin was already showing limited ups before President Trump announced the Chinese import tariff by 10 % on January 21.
Gold/US dollar (left) against Bitcoin/USD (right). Source: Tradingvief / CointeleGRAPH
The S& P 500 index reached its highest level on February 19, exactly 30 days after the start of the trade war, while Bitcoin has repeatedly failed to get more than $ 100,000 in the previous three months. Although the trade war certainly affected the appetite of the risks to investors, strong evidence indicates that the weak price of Bitcoin started well before President Trump took office on January 20.
Spot Bitcoin Etfs Flows and Strategic Bitcoin Reserves and inflation directions
Another data point that weakens the relationship with definitions is the funds circulating in Bitcoin exchange (ETFS), which witnessed $ 2.75 billion in net flows during the three weeks that followed January 21. By February 18, the United States announced plans to impose a tariff on imports from Canada and Mexico, while the European Union had already declined. In essence, the institutional demand for bitcoin continued even with the escalation of the trade war.
Part of the disappointment of the Bitcoin merchants after January 21 stems from excessive expectations surrounding the promise of President Trump’s campaign with the “Strategic National Bitcoin stock”, mentioned at the Bitcoin Conference in July 2024. While investors became a denial, their frustration reached its peak when the actual executive order was issued on March 6.
One of the main factors behind Bitcoin’s struggle to break more than $ 89,000 is an inflationary trend, which reflects a relatively successful strategy by global central banks. In February, the Personal Consumption Expenditure Index in the United States (PCE) increased by 2.5 % on an annual basis, while the consumer price index increased by 2.2 % in March.
Investors turn to more risks after the weak labor market data
In the second half of the year 2022, Bitcoin’s gains were raised with inflation above 5 %, indicating that companies and families turned into an encrypted currency as a hedge against cash. However, if inflation remains relatively under control in 2025, low interest rates would prefer real estate and stock markets directly more than Bitcoin, as reduced financing costs enhance these sectors.
CPI inflation in the United States (left) against the treasury return in the United States for two years (right). Source: TradingView
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The weak labor market also weakens merchants’ demand for risk assets, including bitcoin. In February, the US Department of Labor in the United States reported job opportunities near the lowest level of four years. Likewise, the return on the US Treasury for two years decreased to the lowest level in six months, as investors accept a modest return of 3.88 % for government -backed tools. This data indicates that there is an increasing option for risk alienation, which is not favorable for bitcoin.
Ultimately, twice the prices of bitcoin stems from the unrealistic investor expectations for BTC acquisitions by the US Treasury, which led to a decrease in inflation that supports potential interest rate cuts, and the most competitive macroeconomic environment as investors turn into short -term government ties. Although the trade war had negative effects, Bitcoin was already showing signs of weakness before it started.
This article is intended for general information purposes and does not aim to be and should not be considered legal or investment advice. The opinions, ideas and opinions expressed here are alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
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