Bitcoin Drops 5% as US Trade War Woes Intensify

Bitcoin (BTC) experienced a significant shift in market sentiment as it failed to maintain the $108,000 mark into the May 25 weekly close. The price action struggled to shake off new US trade war woes, which dictated the mood of the market. The snap losses were accompanied by comments from the US President over 50% tariffs on goods from the EU, causing immediate heat in the crypto market. Bitcoin’s latest all-time high of $112,000 remained elusive as further episodes involving specific tech giants continued to impact the market.

Market participants expressed frustration over the volatility caused by the US President's actions. Keith Alan, co-founder of a trading resource, described the situation as "more hot air from the Manipulator in Chief." Despite the volatility, Alan argued that Bitcoin had more room to retest support without extinguishing the broader uptrend. He noted that as long as BTC is trading above the confluence of the MACRO trend line and key moving averages on the Bitcoin Daily chart, the bull trend remains intact.

Other traders shared similar views. Crypto Tony suggested that even a $4,000 drop from current levels by the weekly close would be acceptable, indicating that a close above $104,000 would still be favorable. Merlijn, another trader, identified a classic short-term BTC price magnet in the form of a new "gap" on CME Group’s Bitcoin futures, predicting that the price would come back to fill it.

In a notable move, Hyperliquid trader James Wynn flipped short on BTC after closing a long position worth $1.25 billion. Wynn had previously opened a long position but began losing money due to the volatility caused by the US President's actions. According to research firm Lookonchain, Wynn not only closed his long position but also replaced it with a new short position worth around $110 million. This move caught the attention of market observers, with one trader commenting that it was a lot of trading for an illiquid choppy weekend.

Despite the short-term volatility, traders remain optimistic about Bitcoin's long-term prospects. The market's ability to retest support levels without extinguishing the broader uptrend suggests that the bull trend is still intact. As the market continues to navigate the challenges posed by trade tariffs and other external factors, traders are closely monitoring key support levels and moving averages to gauge the next move in Bitcoin's price action.