Over the weekend, Bitcoin (BTC) faced a potential breach of a pivotal support level, marking the continuation of a downward trend that has lasted three days. This slump is influenced by broader economic issues rather than recent crypto-related pronouncements by President Donald Trump.
As per the latest data from CoinDesk and TradingView, Bitcoin, the top-ranking cryptocurrency based on market capitalization, saw a fall of more than 3%, taking its value down to $83,200. This downward movement tested the 200-day simple moving average (SMA). Since hitting a high of over $92,800 on Thursday, Bitcoin prices have plummeted by more than 10%.
This latest downturn coincides with an expected escalation in the trade dispute between the U.S. and China, set to take effect on Monday. In response to President Trump’s newest increase on Chinese imports, Beijing plans to impose tariffs on specific U.S. agricultural products. These trade war developments have sowed seeds of uncertainty in the market and among policymakers.
Federal Reserve Chairman Jerome Powell, on Friday, reiterated the bank’s cautious approach towards interest rates, given the potential economic consequences of President Trump’s policy changes. His remarks came in light of a weak U.S. nonfarm payrolls report and predictions of a minimum of three Fed rate cuts this year.
Analysts believe that these economic developments, combined with potential recession signals from the bond market, are overshadowing President Trump’s recent announcement of a strategic Bitcoin reserve.
Analytics firm IntoTheBlock, in its weekly newsletter, noted that despite the good news, Bitcoin’s value dropped by 4% from $90,000 to less than $87,000 within hours. The focus on Trump’s crypto-related initiatives seems to be diminishing as the fear of an escalating trade war takes precedence.
The firm further noted that macroeconomic factors, primarily those related to tariffs, have been negatively affecting markets, pointing to a growing positive correlation between Bitcoin, ether, and U.S. stocks.
Actions such as President Trump’s disregard for the stock market and his administration’s focus on reducing long-term interest rates suggest that investor hopes for a Trump-driven bull market might have been overly optimistic, the firm added.
In a recent edition of Crypto Is Macro Now, author Noelle Acheson stated that the lackluster price movements of Bitcoin following the strategic reserve announcement highlight how macroeconomic concerns continue to weigh heavily on crypto assets.
The chart indicates that buyers have stepped in beneath the 200-day SMA on February 28 and March 2, leading to a price recovery. Market participants are likely to keep a close watch on this level to see if a similar move occurs again.
