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Bitcoin Faces 15% Drop Amid Trade War Tensions, ETF Outflows

Coin WorldMonday, Apr 14, 2025 5:04 am ET

1min read

Bitcoin is currently facing a significant challenge as it attempts to break through a persistent downtrend, exacerbated by escalating trade war tensions and substantial outflows from Bitcoin Exchange-Traded Funds (ETFs). The ongoing trade war between the U.S. and other major economies has introduced layers of uncertainty, impacting risk assets, including Bitcoin.

This week, the focus has been on tariffs, which have been a key driver of market volatility. The announcement of a temporary pause on tariffs by President Trump briefly boosted Bitcoin prices to over $86,000. However, analysts warn that further tariff-related developments could disrupt market stability, keeping traders on edge.

In addition to trade war tensions, Bitcoin has been grappling with significant outflows from ETFs, totaling nearly $800 million in recent weeks. This marks one of the toughest periods for these products since their inception. Despite these outflows, analysts like Timothy Peterson argue that the impact on the overall market remains minimal, highlighting Bitcoin’s resilience among investors.

Another factor that could influence Bitcoin’s trajectory is the ongoing decline of the U.S. dollar. The dollar index has fallen to three-year lows, and historically, Bitcoin prices have experienced growth following significant drops in the dollar index. This trend could potentially set the stage for an upward rally for Bitcoin later this year.

Looking beyond the immediate market volatility, structural trends suggest that a rebound for Bitcoin could be on the horizon. Global M2 money supply levels are reaching historic peaks, prompting speculation about future Bitcoin price movements correlated with liquidity influxes. Market analysts like Colin Talks Crypto highlight this correlation, indicating that an increase in M2 often corresponds with upward price shifts in Bitcoin, although these effects typically manifest with a delayed response.

As Bitcoin navigates these uncertain times, the interplay of tariff policies, economic indicators, and market sentiment will heavily influence future price trajectories. Traders and investors alike should brace for continued volatility as they assess the impact of broader economic trends on their strategies. With potential bullish signals looming, close observation of market developments is crucial.

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