Bitcoin Drops 4% Amid Trade Tensions, Inflation Data

Bitcoin's price continued its downward trajectory on Thursday, struggling to maintain its position above $81,000 amidst renewed trade tensions between the US and its North American neighbors. Despite lower inflation figures, bearish sentiment persisted, leading to a three-day consecutive decline. The latest Producer Price Index (PPI) data indicated that industrial inflation is cooling, aligning with the Consumer Price Index (CPI) report released earlier in the week. However, Bitcoin failed to capitalize on this positive economic news, instead extending its decline.

Bitcoin opened trading on Thursday at $83,700 but quickly faced selling pressure, declining by 4% to hover just above $81,000. The $79,000 level was tested earlier in the session, signaling weakening support as market sentiment remained fragile. Traders continued to tread cautiously, avoiding aggressive buy-ins even amidst positive inflation data due to persistent macroeconomic uncertainties and looming trade policy concerns.

Bitcoin briefly attempted a recovery, nearing $82,000 within hours of the PPI data release, but the gains were short-lived. Investors interpreted the lower inflation figures as a potential signal that the Trump administration could extend existing tariffs on Canada and Mexico for a longer period, rather than easing them. This stance has raised concerns that prolonged trade tensions could dampen retail traders’ investment capacity and appetite for risk assets like Bitcoin.

Validating these concerns, the odds on Trump ending the trade war with Canada before May 2025 plunged by 18% following the PPI data release. Historical trends suggest that when odds on trade war resolution decline, risk appetite among investors also weakens, leading to capital outflows from speculative markets. The notable drop in odds suggests that instead of taking advantage of lower inflation to drive bullish momentum, crypto investors remain wary. The prevailing sentiment indicates fears that policymakers might use the inflation cushion to justify higher tariffs for a prolonged period, contributing to Bitcoin’s latest 4% price drop on Thursday.

Bitcoin price forecast signals continued on a downward trajectory on Thursday, trading at $80,981 after a volatile session that saw a drop below $79,955. The daily chart reflects persistent bearish sentiment, with Bitcoin struggling to reclaim key moving averages. The 50-day moving average at $87,034 remains a key resistance, while the lower Bollinger Band at $77,361 signals potential downside risk if bearish pressure intensifies. A break below this level could expose Bitcoin to a test of the psychological $75,000 support.

The Relative Strength Index (RSI) currently hovers at 38.35, reflecting weakening momentum and suggesting Bitcoin is approaching oversold conditions. However, the RSI has not yet dipped below 30, indicating that further downside remains possible before buyers step in. A decisive break above the RSI midline at 50 could confirm a bullish reversal, but for now, sentiment remains fragile. Volume Delta indicators confirm ongoing selling pressure, with red bars dominating the lower section of the chart. Consecutive days of negative volume delta suggest that bears remain in control, absorbing any attempts at recovery.

If Bitcoin fails to reclaim the $83,700 resistance, the risk of a deeper correction remains, potentially testing $75,000 in the coming sessions. The current market sentiment suggests that traders are cautious about the potential for prolonged trade tensions and the impact on risk assets like Bitcoin. The cooling inflation figures, while positive, have not been enough to offset the concerns about trade policy, leading to a continued bearish outlook for the cryptocurrency.