Bitcoin Plummets 20% Amid Trade War Fears, Economic Uncertainties

Bitcoin's price has been on a downward trajectory despite a broader market rebound, a phenomenon that has left many investors perplexed. The cryptocurrency has faced significant pressure due to a confluence of factors, including economic uncertainties and trade war fears. These elements have collectively contributed to a bearish sentiment in the market, with analysts predicting that the fall may not be over yet.

Bitcoin, currently trading around $84,000, has experienced a period of correction alongside the broader crypto market. The largest cryptocurrency has already plummeted more than 20% from its record high two months ago. This decline has been attributed to concerns around trade policies and broader economic uncertainties, which have weighed heavily on both traditional stocks and cryptocurrencies.

Market analyst Timothy Peterson believes Bitcoin’s recent downturn is relatively mild compared to past bear markets. Defined as a 20% drop from an all-time high, this pullback is weaker in magnitude than historical declines and is expected to last only 90 days. Peterson analyzed ten previous bear markets, noting that only four were worse in terms of duration—2018, 2021, 2022, and 2024. He argues that despite short-term price drops, Bitcoin’s adoption trends remain strong, making a deep decline below $50,000 unlikely. He also suggests that BTC may not fall below $80,000 based on momentum. Peterson predicts a possible slide over the next 30 days, followed by a 20-40% rally after April 15. This rally could bring renewed investor interest and push Bitcoin to new highs.

The recent bloodbath caused due to new tariffs on multiple trading partners. These tariffs have triggered retaliatory measures across the globe, leading to fears of a prolonged trade war. Investors are now moving away from riskier assets, including cryptocurrencies, as macroeconomic conditions are not good. In the meanwhile, Data from Glassnode’s Hot Supply metric, which tracks BTC held for a week or less, shows a sharp decline from 5.9% in November 2024 to 2.3% in March 2025. This suggests a drop in speculative trading and highlights weak market sentiment. Nansen research analyst Nicolai Sondergaard warns that crypto markets may face trade war-related pressures until at least April 2025, when negotiations could ease tensions.

Another factor weighing on Bitcoin’s price is the lack of fresh retail investment. Most retail traders are already exposed to BTC, diminishing hopes of a sudden influx of capital to drive prices higher. Plus, the narrative of Bitcoin as a safe haven asset is being challenged, as its price has reacted negatively to tariff news, falling alongside other risk assets. Regulatory challenges persist as well, with experts predicting that U.S. crypto banking restrictions could last until January 2026, despite efforts to push for clearer regulations.

The dominance of short positions in the market signals a lack of strong interest from leading market players, often leading to major market corrections. This bearish sentiment is further exacerbated by the lack of fresh retail investment, which has traditionally been a driving force behind Bitcoin's price surges. Analysts have noted that the current market conditions are reminiscent of previous periods of volatility, where Bitcoin experienced significant declines before rebounding.

Despite the current downturn, some analysts remain optimistic about Bitcoin's long-term prospects. They point to historical patterns where Bitcoin's crashes have often sparked substantial rebounds, sometimes as high as 190%. This optimism is based on the belief that market chaos can create a prime setup for explosive upside, as seen in previous cycles. However, this forecast is based on historical data and analyst predictions, and the actual outcome remains uncertain.

The market's volatility has also been influenced by uncertainty over U.S. interest rates and higher trade tariffs, which have contributed to a broader decline in risk-driven assets. This uncertainty has led to a temporary retreat in Bitcoin's price, with some analysts suggesting that the market could see another drop if the price breaks below $80,000. Key levels between $60,000 and $66,000 are likely to come into play in such a scenario.

In summary, Bitcoin's price drop despite the market rebound can be attributed to a combination of economic uncertainties, trade war fears, and a lack of fresh retail investment. While some analysts remain bullish about Bitcoin's long-term prospects, the current market conditions suggest that the cryptocurrency may face further declines before a potential rebound. The market's volatility and the dominance of short positions indicate a bearish sentiment, but historical patterns offer a glimmer of hope for a future price surge.