Bitcoin plummets due to Trump's sweeping tariffs

The leading cryptocurrency suffers a severe blow and falls sharply, acting as a risk-on asset amid growing global economic uncertainty.

The price of Bitcoin (BTC) suffered a significant drop on Wednesday, plummeting below $83,000, after US President Donald Trump announced the imposition of new global trade tariffs. The leading cryptocurrency, which had shown signs of strength, reaching a daily high of $88,500, reversed its gains and closed the session at $82,526 (Binance price at press time), down 3.10%, in a clear reaction as a risk-on asset to the economic tensions.

Worryingly for theFor the bulls, the price broke down both the 50-day Exponential Moving Average (EMA50), located at $87,700, and the 200-day Exponential Moving Average (EMA200), located at $85,400. / TradingView

The Impact of Trump's Tariffs

Uncertainty gripped financial markets after President Trump unveiled plans to apply sweeping 10% tariffs on imports from all countries. In addition, specific and more stringent reciprocal tariffs were announced for nations deemed to engage in unfair trade practices toward the US, including rates of up to 34% for China, 46% for Vietnam, and 20% for Japan, among others. This protectionist measure raised fears about a potential global trade war and its impact on economic growth, leading investors to divest from assets perceived as riskier.

Bitcoin is considered a risky asset by some investors due to its correlation with the Russell 2000.

Bearish Signals Dominate the Short Term

Bitcoin's price reaction was immediate and negative. After opening the day at $85,158 and climbing to a high of $88,500, very close to the key horizontal resistance at $88,000, selling pressure intensified. The price not only failed to consolidate, but also plummeted below crucial technical levels. At press time, Bitcoin was trading at $82,516, a painful 3.10% below its opening price.

Worryingly for bulls, the price broke below both the 50-day Exponential Moving Average (EMA50), located at $87,700, and the 200-day Exponential Moving Average (EMA200), located at $85,400. Holding below the EMA200 is often interpreted by analysts as a more significant bearish signal. The next relevant horizontal support is located at $76,600.

Market Dynamics: Low Volume and Mixed Signals

The drop occurred amid declining volume in the spot market. Total traded volume was just $5.19 billion, according to data from CheckonChain. This is the lowest amount recorded in the last month and pales in comparison to the $12.42 billion seen on March 4. This low volume suggests little conviction behind the move and makes the market vulnerable. The market bid-ask spread (Spot CVD) was negative at -$89.35 million, confirming the selling pressure.

Derivatives data paints a mixed picture. While total BTC futures open interest fell -6.14% in 24 hours to $51.78 billion (the lowest since March 24), options open interest reached $24.40 billion, its highest amount in four days, with a majority (58.91%) betting on call options. Furthermore, liquidations in the last 24 hours amounted to $179.70 million, primarily affecting short positions (63.35%), which could offer temporary support.

Institutional Flows and Exchange Behavior

Caution is also reflected in institutional flows. Bitcoin spot ETFs saw net outflows of -$40.8 million in the past week, according to data from Coinglass. However, in a potentially positive long-term sign, the Bitcoin balance on centralized exchanges decreased by 3,392.73 BTC in the past 24 hours, which is often interpreted as accumulation by investors moving their coins to private wallets.

Bitcoin faces a deteriorating short-term technical outlook, pressured by adverse macroeconomic factors such as the new US tariffs and internal signs of weakness such as low volume and the breakout of key support levels. As resistance at $88,000 consolidates and the 200 EMA ($85,400) acts as a ceiling, support at $76,600 gains relevance. Investors and traders are closely watching whether mixed signals in derivatives and exchange outflows can counter the current bearish trend. Volatility remains the norm in the crypto market.

Disclaimer: This article is for informational purposes only and does not constitute financial or investment advice. Cryptocurrency markets are highly volatile and carry significant risk. Please conduct your own research before making any investment decisions.