Bitcoin has retreated to $85,000 as it reacts to new US trade tariffs against Canada and Mexico, which President Trump confirmed will take effect on March 4. The market has seen significant outflows from Bitcoin exchange-traded funds, largely attributed to retail investors. Analysts are watching for a potential closure of a futures market gap that could influence BTC’s price direction moving forward.
At the opening of Wall Street on February 27, Bitcoin (BTC) retreated to $85,000 as traders processed the announcement of new trade tariffs by the United States. Following a brief relief bounce to $87,000, BTC/USD faced downward pressure, dropping to recent 15-week lows near $82,000, as President Donald Trump reaffirmed that the tariffs against Canada and Mexico would indeed take effect on March 4.
The confirmation of these tariffs negatively impacted the S&P 500 and Nasdaq Composite Index, both of which opened lower. Concurrently, the US dollar index (DXY) rose by 0.6%, reversing over a week of decline. According to The Kobeissi Letter, Bitcoin’s price performance has been affected by its increasing correlation with stocks and a decrease in liquidity, noting that this trend results in greater flows back into the US dollar, perceived as the ‘safest risky asset’ during trade disputes.
The report also highlighted a significant trend of record outflows from US spot Bitcoin exchange-traded funds (ETFs), with total withdrawals reaching $2.1 billion due to retail investors exiting the market. This has led to a noted decline in overall liquidity in Bitcoin markets. Traders are now focused on identifying potential reversal points for BTC/USD.
Several analysts suggest that a “gap” in the CME Group’s Bitcoin futures market is a critical target. Trader Justin Bennett indicated that Bitcoin appears aimed at closing the $77,360 gap from November, which aligns with a significant occurrence in September 2023. However, Bennett expressed that unless Bitcoin can close February above $92,000, the outlook remains bleak, as this price point serves as a threshold for speculative activity.
In conclusion, Bitcoin has faced significant downward pressure due to the impending trade tariffs announced by President Trump, which has led to a decline in market liquidity and significant outflows from Bitcoin ETFs. Analysts are closely monitoring key price levels and gaps in the futures market, which may influence Bitcoin’s future performance. The current outlook for Bitcoin traders appears challenging unless the cryptocurrency experiences a substantial price recovery.
Original Source: cointelegraph.com
