Bitcoin Faces $70K Test Amid Trump Tariff Panic

The global markets are in turmoil as President Donald Trump's sweeping tariffs have sent shockwaves through the economy, causing a significant sell-off in stocks and raising fears of a potential 'Black Monday' scenario. As investors scramble to find safe havens, Bitcoin is emerging as a potential hedge against the economic uncertainty. Analysts like Michael van de Poppe are warning that Bitcoin could test the $70,000 mark as the market braces for further volatility.



Market Meltdown

The announcement of Trump's tariffs, which include a 10% baseline tariff on all imports and higher targeted duties on key trading partners, has triggered a global market meltdown. The Dow Jones Industrial Average dropped over 2,200 points, or 5.5%, after falling almost 4% on Friday. The tech-heavy Nasdaq and the benchmark S&P 500 each tumbled nearly 6% on Friday, erasing over $6 trillion in market value over the past two days. This selloff has directly affected the retirement savings and other investments of a majority of U.S. consumers, with about 60% of U.S. households owning stocks.

Bitcoin as a Safe Haven

In times of economic uncertainty, investors often turn to safe-haven assets. Bitcoin, with its decentralized nature and limited supply, is increasingly seen as a hedge against economic instability. The recent selloff in global markets due to Trump's tariffs has led to a decline in the value of traditional assets, which could drive investors to seek refuge in Bitcoin. The price of Bitcoin has been volatile, hovering around $78,600 on Monday after falling nearly 5% the previous week, indicating that investors are closely monitoring the situation.



Potential for a 'Black Monday' Scenario

A 'Black Monday' scenario, characterized by a sudden and significant market crash, could have profound short-term and long-term effects on Bitcoin's price and overall market sentiment. In the short term, a 'Black Monday' scenario would likely cause an immediate and sharp decline in Bitcoin's price. If Bitcoin's price were to drop below its support level of $78,258, it could extend the decline to retest its yearly low of $76,606. This is supported by the fact that Bitcoin's price declined by almost 5% last week after being rejected from its key level of $85,000, indicating strong bearish momentum.

Long-Term Implications

In the long term, a 'Black Monday' scenario could lead to a shift in market sentiment, with investors becoming more risk-averse. This could result in a sustained bearish trend, as seen with Ethereum reaching levels not seen since October 2023. However, if Bitcoin finds support around the $78,258 level, it could extend the recovery to retest its daily resistance at $85,000. This is supported by the fact that the RSI reads at 27, below its oversold level of 30, indicating that Ethereum may be undervalued and could be due for a price recovery to the upside.

Conclusion

The implementation of Trump's tariffs is likely to disrupt global supply chains, increase economic uncertainty and inflation, and drive investors to seek safe-haven assets like Bitcoin. The recent market volatility and the potential for a trade war further support the idea that Bitcoin could see increased demand as a hedge against economic instability. However, investors should be prepared for potential short-term volatility and long-term shifts in market sentiment as the global economy navigates this period of uncertainty.