Bitcoin Plunges to $85K as Trump's Tariffs Spark Market Turmoil

Bitcoin's price plummeted to $85,000, marking a significant downturn in the cryptocurrency market. The sell-off was triggered by U.S. President Donald Trump's announcement of new tariffs on Canada and Mexico, which will take effect on March 4. This news sent shockwaves through global markets, leading to a decline in stocks and risk assets. The S&P 500 and Nasdaq indices both fell, while the U.S. Dollar Index (DXY) gained 0.6%.

Crypto analysts attributed Bitcoin's decline to its growing correlation with traditional markets. Investors shifted into the dollar, seeking refuge in what some referred to as "the safest risky asset" during trade wars. Meanwhile, U.S. spot Bitcoin ETFs experienced six consecutive days of outflows, totaling $2.1 billion, with retail investors leading the sell-off.

While retail traders were fleeing the market, a Bitcoin whale known as "Spoofy" was accumulating a significant amount of BTC. According to CryptoQuant, Spoofy acquired 4,000 BTC worth $344 million during the price drop. This whale has a history of buying heavily during market crashes, having previously acquired 70,000 BTC during the FTX and Luna collapses.

Data from Glassnode revealed that recent Bitcoin buyers were realizing major losses, with over $2.16 billion in sell-offs coming from short-term holders. In contrast, long-term holders remained relatively unfazed, reinforcing the notion that panic selling is often a mistake made by inexperienced investors.

As Bitcoin struggles, traders are now closely watching the CME futures gap near $77,000. This has led many to wonder whether a further drop in price is on the horizon. At the time of writing, Bitcoin's price was hovering around the $85,000 mark, with traders and investors eagerly awaiting the market's next move.