Trump's 'Tariff Bomb' Causes Crypto Plunge... Can Bitcoin Hold On? [Kang Min-seung's Trade Now]

"Bitcoin, Recovery to Continue if it Stably Breaks 100k"

"Possible Bearish Trend if it Falls Below 93.5k"

Photo=Chip Somodevilla / Shutterstock.com

Bitcoin (BTC, Bitcoin), which is under downward pressure due to the hawkish rate freeze by the U.S., is showing a decline amid concerns over U.S. President Donald Trump's 'tariff bomb' policy. Recently, most altcoins (cryptocurrencies other than Bitcoin) have recorded double-digit declines, but Bitcoin is relatively limiting its losses and defending against further drops.

Market experts have analyzed that Bitcoin can continue its recovery if it stably breaks the psychological resistance level of $100,000, but if it falls below the support level of $93,500, the decline could widen.

As of 11:39 a.m. on the 6th, Bitcoin is trading at 151.99 million won on the Upbit KRW market (equivalent to $97,183 on the Binance USDT market), up 0.36% from the previous day. At the same time, the Kimchi Premium (the price difference between overseas exchanges and domestic exchanges) has recently risen significantly to 8.39%.

"Trump's Tariff Shock... Stock and Crypto Markets Fluctuate"

The global stock and cryptocurrency markets are experiencing a turbulent period due to President Trump's extensive tariff policy. Previously, President Trump declared a national emergency and signed an executive order imposing tariffs on Canada, Mexico, and China under the International Emergency Economic Powers Act (IEEPA).

Federal Reserve Chairman Jerome Powell speaks at a press conference following the FOMC in January. / Photo=Federal Reserve website

The market showed a rollercoaster-like flow in response to Trump's tariff measures. In particular, the cryptocurrency market has been under increased downward pressure since the U.S. Federal Reserve's hawkish rate freeze last month, with concerns over Trump's tariff enforcement intensifying the bearish trend. This is because a global tariff war could lead to higher inflation and reduce the likelihood of a rate cut.

Meanwhile, President Trump decided to delay the '25% full taxation' on Canada and Mexico for a month on the 3rd (local time). However, tariffs on China remain in place. In response, China has also imposed a 15% tariff on some items, such as U.S. coal. The White House recently announced that work is underway to schedule a call between President Trump and Chinese President Xi Jinping.

Photo=CME FedWatch capture

Market participants are not overly concerned, hoping for tariff negotiations between the U.S. and China. As of 11 a.m. that day, according to the Chicago Mercantile Exchange (CME) FedWatch, the likelihood of the Fed freezing the benchmark rate in March was 83%. FedWatch also projected a 36.5% chance of a rate cut in May and a 46.5% chance in June. The likelihood of rate cuts in May and June has slightly increased from before.

"Bitcoin, Limited Decline Despite Panic Selling... Coupling with Stock Market Intensifies"

Inflow of funds into Bitcoin spot ETF listed in the U.S. / Photo=Farside Investment

Bitcoin spot exchange-traded funds (ETFs) saw a net inflow of $559.5 million (about 809.4 billion won) last week (from the 27th to the 31st of last month). Optimism was bolstered by U.S. Federal Reserve Chairman Jerome Powell's crypto-friendly remarks and news that Trump's affiliate, Trump Media, is entering the crypto business and investment. On the other hand, the lack of friendly policies in the first press conference of David Sachs, appointed as the AI and crypto czar of the Trump administration, disappointed the market.

Recently, Bitcoin has quickly recovered after plunging due to concerns over the 'tariff bomb.' On-chain analysis platform Glassnode reported on the 4th that "Bitcoin showed a rapid rebound after a sharp decline over the weekend following the Trump administration's tariff announcement," adding that "new capital inflows from institutions and high-net-worth investors limited the losses even during the adjustment phase." Compared to the bull markets of 2017 and 2021, recent Bitcoin volatility has decreased significantly.

Bitcoin volatility exceeded 80-100% during the bull markets of 2017 and 2021, but has remained below 50% over the past three months. / Photo=Glassnode

There is also a forecast that market liquidity will focus more on Bitcoin for the time being. The report stated, "There is a significant difference between the funds flowing into Bitcoin and the capital flowing into the altcoin market," predicting that "Bitcoin dominance (the proportion of Bitcoin in the total market capitalization of cryptocurrencies) will continue to rise with this trend." Bitcoin dominance temporarily surpassed 64% on the 3rd, reaching its highest level in four years since January 2021.

Bitcoin dominance is expected to continue its upward trend for the time being. / Photo=Glassnode

The cryptocurrency market is struggling to find direction amid growing uncertainty. Crypto analysis firm Kaiko analyzed on the 3rd that "Trump's tariff measures have led to a series of liquidations in the derivatives market, increasing volatility." The investment industry estimates that at least $8 billion (about 11.58 trillion won) to $10 billion (about 14.479 trillion won) in cryptocurrency futures contracts have been liquidated as the market's decline has deepened recently.

The report continued, "In particular, there has been an increase in put option bets in the options market, indicating a short-term price decline," but added, "As the end of the month approaches, the balance is being restored. Option traders do not expect Bitcoin prices to collapse significantly despite the tariff issue." Kaiko diagnosed, "The funding rate, which reflects the sentiment of futures investors, has remained low throughout the year. The market is struggling to find a clear direction amid growing uncertainty."

In particular, Bitcoin is showing a strong trend of synchronization with the U.S. stock market. Global cryptocurrency exchange Bitfinex stated in a weekly research report that "Bitcoin maintains a bullish structure in the long term despite short-term volatility," diagnosing that "recently, Bitcoin is reacting more sensitively to macroeconomic trends." According to the report, the 30-day correlation coefficient between Bitcoin and the S&P 500 index recently rose to 0.8, reaching its highest level in five months.

There is also an observation that the market's reaction to Trump's tariff measures was somewhat excessive. Crypto data analysis firm Santiment analyzed on the 4th that "the cryptocurrency market overreacted to Trump's massive tariff imposition, and investors who engaged in panic selling are now regretting it," adding that "overall cryptocurrency trading volume surged by a whopping 94% compared to last week. The recent high volatility in the market has heightened trading enthusiasm, and investor interest has soared as much as it did during Trump's inauguration two weeks ago."

"Bitcoin, Boxed for the Time Being... Needs to Break 100k to Turn Bullish"

Market experts believe that Bitcoin is likely to continue its upward trend if it breaks the psychological resistance level of $100,000, but if it falls below $93,500, the bearish trend could intensify. On-chain data also suggests that recent new demand for Bitcoin is being led by institutions and large investors.

Bitcoin is trading above major support levels but lacks upward momentum, making it difficult to break through resistance levels. Ayushi Jindal, a researcher at NewsBTC, diagnosed that "Bitcoin failed to rise further around $102,500 and turned downward again. The bearish trend intensified as it even gave up the $100,000 level."

The analyst analyzed that "Bitcoin has the potential to rebound if it holds the support range of $95,500 to $96,500," but also noted that "there is a downward trend line forming around $99,000, which could make further upward movement difficult." If Bitcoin breaks through $100,000, the likelihood of continuing the upward trend increases, but if it falls below $93,500, it could expand its decline to $91,000.

There is also a forecast that Bitcoin, which is attempting to rebound, will move within a box range for the time being. Rakesh Upadhyay, a researcher at Cointelegraph, predicted that "Bitcoin is attempting to rebound as buying pressure is entering around $90,000," but also noted that "it is likely to continue fluctuating within the box range for the time being."

The analyst analyzed that "if Bitcoin fails to break through the next resistance level of $101,161, it is likely to retest major support levels," adding that "if Bitcoin closes below $85,000 (on a daily basis), it could signal the start of a full-fledged downward trend."

Alex Kuptsikevich, a senior market analyst at FXPro, also analyzed that "the cryptocurrency market has rebounded as buying pressure increased near the short-term bottom, but a new catalyst is needed for sustained upward movement." The analyst interpreted that "Bitcoin appears to have found a short-term balance as it continues to hover around $97,500," but also noted that "the fact that it is below the psychological resistance level of $100,000 is not a positive sign."

There is also an observation that the sentiment in the altcoin market is cooling. The analyst added that "Ethereum (ETH), the leading altcoin, serves as a leading indicator in the altcoin market, and considering the current trend, the market outlook does not seem bright." In fact, Ethereum recently fell below the important support level of $2,980, and most altcoins showed double-digit declines.

Kang Min-seung, Bloomingbit Reporter minriver@bloomingbit.io