Bitcoin Plunges Below $94K as Trump Trade War Sparks Global Market Turmoil
With global markets responding to outgoing President Donald Trump’s harsh trade policies, Bitcoin (BTC) fell to $93,101 on Monday in a significant market turn-off, an 8% drop.
With almost $1.3 billion in long positions sold out in just 12 hours, the bitcoin market saw a general sell-off with roughly $300 million in BTC positions and $400 million in ETH positions erased.
Trump’s Tariffs Impact Crypto Market
Decline of the flagship BTC/USD coincides with more general market volatility brought on by Trump’s declaration of significant tariffs: 25% on imports from Canada and Mexico and 10% on Chinese goods. The action has raised questions of a worldwide trade war since the European Union guarantees a strong reaction to any tariffs applied on its member countries. With Trump saying a deal may be “worked out,” BBC sources suggest the United Kingdom seems to be the only country possibly getting a respite.
Other altcoins had even more sharp drops:
- Ethereum ETH/USD sank 20% to $2,500.
- Solana SOL/USD lost 13% to $184
- XRP XRP/USD plunged 28% to $2.
- The CoinDesk 20 index dropped 17%.
- Trump’s own memecoin, TRUMP, dropped 12%
Global Macroeconomic Developments Weigh on Bitcoin
The market turbulence exists within a complex web of global factors:
- The emergence of DeepSeek R1, a Chinese open-source AI model, has rattled US tech markets
- Potential tightening of Nvidia export restrictions to China
- Mounting inflation concerns due to trade barriers
- Uncertainty around Federal Reserve policy responses to trade-war induced economic changes
Bitcoin ETFs Gain Momentum
Despite the volatility of the present market, the US spot Bitcoin ETF market shows amazing strength. The performance of January has well exceeded predictions:
January ETF Highlights
- Total net inflows reached $4.94 billion
- BlackRock’s iShares Bitcoin Trust (IBIT) led with $3.2 billion in inflows
- Fidelity Wise Origin Bitcoin Fund (FBTC) secured second place with $1.3 billion
- Grayscale Bitcoin Mini Trust ETF attracted $398.5 million
- Bitwise Bitcoin ETF (BITB) gathered over $125 million
Chief investment officer of Bitwise Matt Hougan estimates these numbers might lead to yearly inflows more than $50 billion by year-end. When one compares this estimate to the historical record of gold ETFs, which witnessed second-year flows more than twice from $2.6 billion to $5.5 billion between 2004 and 2005, it acquires credibility.
Bitcoin Market Dominance Above 60%
Rising above 60%, Bitcoin’s market share is 60.59%, suggesting that, in spite of general market downturn, Bitcoin is showing relative strength over alternative currency. This statistic implies that in times of market uncertainty, investors are choosing the established track record of Bitcoin.
Bitcoin Price Prediction
Bullish Long-term Outlook
Head of Alpha Strategies at Bitwise, Jeff Park, debuts Bitcoin’s potential appreciation as his “highest conviction macro trade for the year.” Park makes comparisons to the Plaza Accord of 1985, implying that present trade conflicts can cause:
- Weakening of the US dollar in global markets
- Lower yields on US government securities
- Increased inflation in trading partner nations
- Growing demand for alternative store-of-value assets
Near-Term Cautious Outlook
Several analysts have expressed cautions regarding possible short-term volatility:
- Van Nuener anticipates additional downward pressure following the opening of US futures markets
- BitMEX co-founder Arthur Hayes had previously predicted a sell-off around Trump’s inauguration
- Ryan Lee of BitGet Research forecasts a potential correction to $95,000
- The US Dollar Currency Index (DXY) shows continued strength since October 2024, potentially pressuring crypto prices
Looking Ahead
The cryptocurrency market faces a critical juncture as multiple factors converge:
- Implementation timeline and details of Trump’s tariff policies
- Response measures from affected nations, particularly the EU and China
- The role of major financial institutions in Bitcoin ETF adoption
- Integration of traditional finance infrastructure with cryptocurrency markets
- Impact of geopolitical tensions on global crypto adoption
With the editorial board of the Wall Street Journal characterizing the situation as the “Dumbest Trade War in History,” Wall Street’s response has been notably hostile. But the growing institutional presence of cryptocurrencies through ETFs could offer a stabilizing element during this uncertain moment.
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