Bitcoin Faces Multi-Month Lows Amid US-China Trade War

Bitcoin revisited multi-month lows today as concerns over the US-China trade war kept investors on alert. A wave of liquidations decreased the overall cryptocurrency market capitalisation under the $3 trillion mark, a level last seen before November 10, leading into the 2024 US election rally.

As the market fluctuated, the market cap was reported at $2.717 trillion, which is over 5% lower than the previous day. During the past 24 hours, 241,118 traders were liquidated, bringing total liquidations to $696.38 million. The largest liquidation order was on Binance’s BTCUSDT pair, valued at $32.09 million.

The crypto fear and greed index dropped to 10, indicating “extreme fear.” With heightened sell pressure, traders are cautious, and the altcoin market is struggling to find momentum.

Why is Bitcoin Crashing Today?

Bitcoin plummeted over 5% to $79,367, influenced by several bearish factors. Notably, remarks from US President Donald Trump suggested that markets might experience short-term pain due to his economic policies, which include trade tariffs on China, Canada, and Mexico. Trump mentioned in a Fox News interview, “There could be a little disruption,” intensifying fears about an ongoing trade war with China, which has shifted investors towards more stable assets and led to liquidations in crypto markets.

Additionally, China’s new retaliatory tariffs on US agricultural goods took effect today, further exacerbating market fears. This comes on the heels of disappointment over Trump’s exclusion of direct Bitcoin purchases from his strategic reserve plans. Bitcoin futures on the Chicago Mercantile Exchange opened on March 10 at $82,110, descending by $4,320 from the previous day’s close of $86,430. This is the second-largest single-day drop this month, following a significant plunge on March 3.

Bitcoin Price Outlook: More Pain Ahead?

At the time of reporting, Bitcoin traded at $80,526, with bulls having difficulty reclaiming the $82,000 level that had been a key support point. Analyst Arthur Hayes suggested the potential for further dips, possibly revisiting $78,000. If that threshold fails to hold, he anticipates $75,000 as the next critical target due to a concentration of Bitcoin options.

Meanwhile, analyst Rekt Capital noted the importance of Bitcoin’s relative strength index (RSI), indicating that a scenario where price forms lower lows while RSI shows higher lows could signal a bullish divergence. Historically, Bitcoin has bounced back when the daily RSI dipped below 28. As per the latest figures, the RSI stood at 33.2, suggesting that while Bitcoin is not at a historical bounce level yet, it may be close.

Traders are also on the lookout for important economic data releases, including the US Consumer Price Index on March 12 and the Producer Price Index on March 13. Higher-than-expected inflation may lead the Federal Reserve to withhold rate cuts, which would tighten financial conditions further, pressuring risk assets like Bitcoin. Conversely, a cooler inflation reading could reignite optimism for monetary easing, possibly benefiting the crypto market.

Top Altcoins Struggle

Despite the overall downturn, the altcoin market experienced a slight uptick, rising from $1.09 trillion to nearly $1.15 trillion. However, only a few altcoins managed to retain gains, including SuperRare (RARE), IOST (IOST), and B3 (B3), while most of the top cryptocurrencies continued to slump.

The lack of interest among altcoin traders was highlighted by the Altcoin Season Index, which stood at 24, indicating that most altcoins are underperforming compared to Bitcoin.

Source: CoinMarketCap
The weak momentum in the broader altcoin market coincided with a lack of interest among altcoin traders, as the Altcoin Season Index stood at 24 when writing, indicating that the majority of altcoins were underperforming compared to Bitcoin.

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