Bitcoin Plunges as Trump Confirms Tariffs on Canada and Mexico

Bitcoin's price retreated to $85,000 on Feb. 27 as U.S. President Donald Trump confirmed that tariffs against Canada and Mexico would go into effect as scheduled on March 4. The news sent markets reeling, with both the S&P 500 and Nasdaq Composite Index opening down, while the U.S. dollar index (DXY) gained 0.6% to cancel out more than a week of downside.

Bitcoin (BTC) pulled back from a relief bounce to $87,000 on the day, following a trip to new 15-week lows near $82,000 into the daily close. Bulls struggled to maintain momentum as Trump doubled down on the tariffs, which are set to impact trade between the U.S. and its North American neighbors.

Trading resource The Kobeissi Letter attributed Bitcoin's poor price performance to higher stocks correlation and reduced liquidity. "Ironically, a lot of it flows back into the U.S. Dollar," it wrote. "The U.S. Dollar becomes the 'afest risky asset' during trade wars because it's the most 'table' currency."

Kobeissi added that it was mostly smaller investors rushing for the exit, accounting for the record outflows from U.S. spot Bitcoin exchange-traded funds (ETFs). "Bitcoin ETFs have now seen 6-straight daily withdrawals, totaling -$2.1 BILLION. The majority of withdrawals were taken by retail investors," it confirmed. "Liquidity has dropped."

Bitcoin traders sought to identify potential definitive reversal areas for BTC/USD. A "gap" in CME Group's Bitcoin futures market is currently a popular target. "Bitcoin looks determined to close that $77,360 November CME gap, which could intersect with the September 2023 trend line," popular trader Justin Bennett continued on the topic. "Probably some relief in March from this area, but the monthly chart looks toppy unless $BTC can miraculously close February above $92k. The odds aren't looking good."