"Bitcoin's Volatile Ride: USD Liquidity Tightens, Trump's Crypto U-turn, Tariff Tensions Loom"

Bitcoin's price has been volatile in recent weeks, with the cryptocurrency trading between $90,000 and $100,000. This price range has been influenced by a combination of factors, including tightening USD liquidity conditions and policy developments.

The U.S. Treasury General Account (TGA) has seen a notable increase in its cash balance, rising from $623 billion to $800 billion over just four weeks. This development marks a departure from previous patterns, particularly during debt ceiling issues, when the Treasury typically reduced TGA balances. Market expert Arthur Hayes, chief investment officer at Maelstrom, highlighted these liquidity concerns on social media, noting that the tightening of dollar liquidity typically creates challenging conditions for risk assets, including cryptocurrencies.

The Trump administration's approach to its campaign promise of establishing a strategic Bitcoin reserve has shifted. Initial market excitement over this proposal helped drive Bitcoin's price from $70,000 to over $100,000. However, recent statements from Trump's crypto task force indicate a more measured approach. Rather than immediate implementation, the administration announced plans to evaluate the feasibility of such a reserve. This news triggered a price decline from over $100,000 to $96,000 during overnight trading. Jim Bianco, president and macro strategist at Bianco Research, LLC, noted the change in tone, stating that evaluation and study typically indicate reluctance rather than commitment to action in Washington.

Technical analysis reveals additional warning signs. The 14-week relative strength index (RSI) shows a bearish divergence pattern similar to the one observed during the 2021 market peak. This technical indicator suggests a potential slowdown in upward momentum.

Trade tensions between major economies have introduced another layer of complexity to Bitcoin's market dynamics. The U.S. implementation of new tariffs on Chinese goods prompted swift retaliation from Beijing. China's Ministry of Finance announced plans to impose additional tariffs of 15% on coal and liquefied natural gas, along with 10% tariffs on various other goods including agricultural equipment, crude oil, and certain vehicles. These measures are set to take effect on February 10. Back in 2018, when Trump kicked off the tariff war, the markets took a hit within weeks, with the S&P 500