Bitcoin's $90K Test Looms as US-China Trade Tensions Intensify

Bitcoin's Price Retrace Below $90K Looms as US-China Trade Tensions Escalate

Bitcoin's (BTC) price has been volatile in recent days, with the cryptocurrency falling below the $100,000 mark amid escalating trade tensions between the United States and China. The ongoing trade war has raised concerns about global economic stability, which could lead to a potential correction in Bitcoin's price.

On February 4, the Ministry of Finance of the People's Republic of China announced new import tariffs of up to 15% on some US imports, effective February 10. This decision came in response to US President Donald Trump's executive order imposing import tariffs on goods from China, Canada, and Mexico. The announcement of these tariffs has increased fears of a potential global trade war, which could have significant implications for the global economy and financial markets.

Bitcoin's price has been affected by these developments, with the cryptocurrency falling below the $100,000 mark on February 4. Despite finding its daily bottom and reversing from $96,200, Bitcoin's price risks a correction below $90,000 as global trade and inflationary concerns continue to weigh on investor sentiment.

Ryan Lee, chief analyst at Bitget Research, said that China's tariff decision could introduce additional volatility to risk assets such as Bitcoin. "Escalating tensions may weaken traditional markets, prompting investors to seek Bitcoin as a hedge against inflation and currency devaluation. However, a broader market sell-off driven by economic uncertainty could also trigger short-term corrections, potentially pushing Bitcoin below $90,000," Lee told Cointelegraph.

Historically, large economies introducing import tariffs have caused significant market drawdowns, according to James Wo, the founder and CEO of venture capital firm DFG. "This might see a potential short-term risk of a wider correction sub $90,000 for Bitcoin and in the broader market including equities and commodities," Wo said. However, a sustained trade war might also accelerate the dollar debasement while pushing up inflation, driving global demand for alternatives to US dollar-denominated assets.

Bitcoin needs to remain above $97,000 to avoid more downside volatility. A potential correction below $97,000