Tariff war erases recent Bitcoin gains

The Strategic Cryptocurrency Reserve and recession fears generate panic among investors, while Bitcoin closes at USD 86,220.

The price of Bitcoin suffered a fall of 8.54% this Tuesday, closing at USD 86,220, affected by the economic uncertainty generated by Donald Trump's tariff policy. In addition to fears of a recession in the US, according to projections from the Atlanta FED. The news of a Strategic Cryptocurrency Reserve announced by Trump, together with the lack of clarity in its financing, generated doubts among investors, while the crypto market faces a volatile scenario.

On the daily chart, Bitcoin was rejected by the exponential moving averages (EMA50 and EMA100), sending a short-term bearish signal. / Tradingview

The shadow of recession and tariffs

The trade war between the United States and China took center stage again, with Chinese retaliation against the 10% tariffs imposed by Trump. This inflationary scenario generated panic in traditional markets, which closed with losses of 1.76% for the S&P500, and also impacted the crypto sector.

The Atlanta FED GDPNow model projects a first quarter growth rate in the US of -2.8%, below the -1.5% previously estimated. This negative data, added to the ISM and construction spending reports, weakened investor confidence in risk assets, including bitcoin. The world's leading cryptocurrency is seen by some investors as a risk asset.

The Strategic Cryptocurrency Reserve and its implications

Trump's announcement on the creation of a Strategic Cryptocurrency Reserve, which would include developments such as Ripple and Cardano, generated both expectations and fears. While some actors in the sector see this as a long-term boost, others question the centralization of these cryptocurrencies and the bureaucratic obstacles that their implementation would entail.

Details of the plan are expected to be revealed at the government's first crypto summit on March 7, but investors have already noted the challenges, such as the need for congressional approval and uncertainty about actual cryptocurrency purchases.

The dollar in decline and its impact on cryptocurrencies

Despite the volatility in the markets, investors seem to be ignoring the fall of the dollar and bond yields. The DXY index, which measures the strength of the dollar against a basket of currencies, fell 0.94% to close at 106.55 points, erasing the recovery it had achieved in the last three sessions. This weakening comes in a context in which European leaders step up their support for Ukraine, while US economic indicators show signs of softening.

The US manufacturing PMI and construction spending fell below expectations, increasing the likelihood of multiple interest rate cuts by the FED this year. The 10-year Treasury bond yields also fell, settling at 4.14%, which could give the Fed some breathing room to adjust its monetary policy should the economy continue to weaken.

This scenario could benefit bitcoin and the rest of the cryptocurrencies, as a weaker dollar and lower interest rates usually boost risk assets. Investors are keeping an eye on key labor data due out later this week, which could define the direction of monetary policy and, consequently, the crypto market.

The impact on the crypto market

Bitcoin futures open interest fell to $48.86 billion, hitting four-month lows, suggesting that traders are closing losing positions. Although this indicates a bearish trend, the decline in open interest also suggests that selling pressure could be losing steam.

On the daily chart, Bitcoin was rejected by the exponential moving averages (EMA50 and EMA100), sending a short-term bearish signal. However, the EMA200 still maintains a long-term bullish trend. The price drop occurred with a trading volume that doubled the 25-day average, pushing Bitcoin into the oversold zone according to the BBP indicator.

Miners and hashrate in decline

The recent drop in the Bitcoin price was also reflected in a decrease in the hashrate, which registers 726.81 Ehash/s, far from the all-time high of 992.29 Ehash/s reached on February 2. Despite this, 89.03% of Bitcoin addresses still hold unexecuted profits, indicating that many investors are still confident of a recovery.

The crypto market faces a complex scenario, with economic uncertainty, trade tensions and regulatory debates. As Bitcoin struggles to maintain its long-term uptrend, investors are keeping an eye on the Fed's next moves, the dollar's performance, and the details of the global summit.March iptographic.

Disclaimer: The information provided in this article is for informational purposes only and does not constitute financial, investment, or legal advice. Please do your research and consult a professional before making any financial decisions.