Bitcoin Drops Below $75,000 Amid US-China Tariff Tensions

On April 9th, QCP released its daily market observation, highlighting the continued decline in the market following the United States' implementation of a new round of tariffs on China. The volatility in the market remains high, with the VIX staying above 40 for the third consecutive day. This escalation in tariff tensions has significantly amplified volatility in the cryptocurrency market, with Bitcoin's price briefly dipping below the $75,000 support level. This development has raised concerns among analysts about the potential for further declines in the stock market, which could exacerbate the downward pressure on Bitcoin and other cryptocurrencies.

The heightened volatility in the crypto market is a direct response to the escalating trade war, which has introduced new levels of uncertainty and risk for investors. The brief drop in Bitcoin's price below $75,000 is a clear indication of the market's sensitivity to geopolitical tensions and the potential for further declines if the trade war continues to escalate. Analysts have warned that a further decline in the stock market could lead to a more significant drop in Bitcoin's price, potentially breaking below the $75,000 support level. This would have far-reaching implications for the broader cryptocurrency market, as Bitcoin's price movements often set the tone for other digital assets.

Even traditional safe-haven assets failed to play their intended role. Safe-haven assets were unable to provide effective hedging, as both gold prices and US bonds saw sell-offs due to investors seeking to reduce risk and meet margin calls. The Trump administration showed signs of pressure with a lower-level refinancing strategy for US debt, as the entire yield curve experienced a surge. The 10-year US Treasury bond yield reached a peak of 4.50%, while the 30-year yield briefly surpassed 5%. Credit spreads continued to widen, reflecting a general deterioration in risk sentiment. Instead of shifting course, President Trump seemed to be employing a Martingale strategy, doubling down with each retaliatory move.

The market is now pinning its hopes on two possibilities: Trump's market support measures or the Fed's market support measures for reinforcement. However, both seem unlikely to materialize immediately. With the unemployment rate remaining steady and signs of inflation recovery, the Fed may maintain the current interest rates in the foreseeable future. This contrasts with the market's pricing, as the market anticipates four rate cuts in 2025, including speculation about intermeeting rate cuts. Bitcoin traded sideways around the $75,000 level, but if the stock market experiences another significant drop, this level may crumble. Ethereum continued to underperform, dropping to $1,400, its lowest level since early 2023. With increased volatility, cryptocurrency yield strategies are once again in focus. Rising implied volatility provides an enticing opportunity for earning returns through structured trades.

The current situation underscores the need for investors to remain vigilant and adaptable in the face of rapidly changing market conditions. As the trade war continues to unfold, it is crucial for investors to stay informed about the latest developments and adjust their strategies accordingly. The volatility in the crypto market is a reminder of the inherent risks associated with investing in digital assets, and the importance of conducting thorough research and due diligence before making any investment decisions.