Bitcoin’s Rollercoaster: Trump’s Crypto Reserve Promise Fuels Volatility as BTC Falls Below $85K
In a dramatic reversal of fortune, Bitcoin has retreated below the $85,000 mark, surrendering most of the gains it made following President Donald Trump’s announcement of a planned U.S. strategic crypto reserve. The world’s leading cryptocurrency BTC/USD is currently trading under $84,000, barely above its pre-announcement levels.
Crypto Market’s Whiplash
Originally sending Bitcoin skyward to $95,000, Sunday’s “Trump bump” was fleeting. BTC had dropped by Monday afternoon in what experts consider to be a typical “buy the rumor, sell the news.” Based on CoinGlass statistics, the volatility set off in just four hours over $150 million in crypto liquidations.
“Crypto vols are still rather high with both majors reflecting a Put Skew until end-March,” said crypto trading company QCP Capital in an investor update. “The VIX is also high, indicating more general market unease in risk assets overall, especially following the recent tariff increases from the U.S. government.”
The ‘Xi Pump’ Parallel
Many observers have compared the present circumstances with the infamous “Xi pump” of 2019, when comments on the good blockchain of Chinese President Xi Jinping momentarily raised crypto values before a later market collapse.
“This is a textbook swing setup for me normally but if you’ve been around long enough you remember the Xi pump,” advised crypto trader Magus, implying that the most recent movement might have been “exaggerated because of sentiment.”
Another crypto researcher, Cold Blooded Shiller, noted that before creating new lows roughly 30 days later, both incidents followed similar retests of historical support zones.
Broader Macroeconomic Market Pressures
The fall in cryptocurrencies corresponds with weakness in conventional markets. As investors considered the ramifications of Trump’s upcoming tariffs against China, Canada, and Mexico, U.S. stock indices moved firmly down. The S&P 500 declined 0.8%; the Nasdaq dropped 1.1%.
Targeting American goods including soybeans and vital minerals, China has already declared reprisals against the U.S. taxes. Economists warn that this escalation might possibly reduce U.S. GDP by 0.3% to 1.3%.
Strategic Crypto Reserve Realities
Although Trump’s declaration excited some people, market players soon saw the regulatory obstacles the suggested strategic crypto reserve would present. The scheme calls for congressional approval and would involve a maybe protracted implementation period.
Legal specialist in crypto legal matters James “MetaLawMan” Murphy pointed out that money is still the crucial question even with quick congressional approval. He advised that stopping government crypto asset sales would be the most likely first measure with little effect on prices.
Further information is expected during the first government crypto summit set for March 7, where Trump has vowed to discuss strategies including Bitcoin, Ethereum, and other cryptocurrencies as main components of the strategic digital asset reserves of the nation.
BTC/USD Technical Analysis Reveals Mixed Signals
Glassnode data suggests Bitcoin remains in a distribution phase rather than accumulation, with the platform noting that Bitcoin’s accumulation trend score has stayed below 0.5 for 58 consecutive days. This extended period of net distribution typically aligns with market corrections.
Glassnode said, “accumulation and distribution phases have alternated within a 57-65 day window on average.” “With the latest read at 0.9, the Trend Score indicates large entities are still in a net distribution regime, with no confirmed transition to accumulate yet.”
Suggesting these investors remain in a “fragile position” with profitability at breakeven, the short-term holder cost basis has slipped below the key $92,700 barrier.
Looking Forward: Bitcoin Price Outlook
Some analysts remain cautiously hopeful about Bitcoin’s chances for recovering the $90,000 support level despite the present retreat. MicroStrategy, now Strategy, is supposed to keep accumulating Bitcoin independent of price fluctuations, hence offering fundamental support.
As trader Jelle observed, “Bitcoin broke down from the range, plummeted hard – then promptly soared back up to regain the range lows. Better low around this location would be ideal.”
As conventional markets exhibit symptoms of stress and global economic tensions rise, Bitcoin’s purpose as a hedge against supposed excessive stock market valuations or real estate corrections could work in its favor and maybe drive values back beyond $95,000 in the next weeks.
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