Tariff war shakes the crypto market and Bitcoin falls 7%

Bitcoin falls to $77,483 after breaking through key support. Is panic selling taking hold in the crypto world?

The price of Bitcoin opened with a sharp 7.25% correction, trading at $77,483 at the time of this report at the opening of the Asian session. The world's leading cryptocurrency broke through the crucial support at $81,200, intensifying fear in global markets, already shaken by the escalating tariff war initiated by US President Donald Trump. Adding to this gloomy outlook is Friday's intervention by Federal Reserve (FED) Chairman Jerome Powell, who dampened hopes of an urgent interest rate cut, citing the strength of the US labor market and the persistence of inflation still far from the 2% target.

The Bitcoin price broke through the horizontal support at $81,200, now trading with bearish sentiment below the 50- and 200-period exponential moving averages. / TradingView

Market Anticipates Pressure for Rate Cut Despite Powell's Stance

Despite Powell's firmness, the federal funds futures market reflects growing expectations for a future rate cut. Bets on the interest rate remaining at 4.50% fell sharply to 63.5%, from 81.5% the previous week. The sharp decline in the equity markets could be putting pressure on the Fed to reconsider its stance. An additional factor is the collapse of the 10-year bond yield to 4%, now trading below the Fed's benchmark interest rate.

Liquidity Leak in Bitcoin Futures Signals Investor Lack of Interest

Total open interest in Bitcoin futures fell 1.96% to $51.41 trillion, the lowest level since March 19. This decline marks a downward trend from the peak of $61.19 billion reached on March 24, suggesting reduced liquidity and a possible lack of investor interest in current prices. However, Bitcoin managed to hold above the next horizontal support at $76,600.

Fear and Greed Index Falls into the "Fear" Zone

CoinMarketCap's Fear and Greed Index places the crypto market in the "fear" zone at 27 points, a decline from the rebound following the "extreme fear" zone on March 9. Historically, these levels have been considered buying opportunities by speculators and investors. Interestingly, medium-term Bitcoin holders (3-5 years) increased their positions since February 12, going from 12.09 million BTC to 12.37 million BTC, taking advantage of the price drop to accumulate. Short-term traders hold a balance of 1.3 million BTC, while long-term investors (7-10 years) only saw a slight decrease in their balances to 6.20 million BTC.

Bitcoin Pierces Key Support

The Bitcoin price pierced the horizontal support at $81,200, now trading with bearish sentiment below the 50- and 200-period exponential moving averages. Although it managed to hold above the next support at $76,600, the recent downward movement strengthened the bears. The trading volume recorded so far exceeds the 25-day average, suggesting that the decline is consistent.

Disclaimer: This article is for informational purposes only and does not constitute financial advice. The cryptocurrency market is highly volatile and carries significant risks.