Bitcoin Plunges Below $78K Amid US-China Trade Tensions

Bitcoin's price has been volatile in recent days, with a significant drop of over 6.5% in the past 24 hours, pushing it below the $78,197 mark, a level not seen since November 10, 2024. This decline has been attributed to growing macroeconomic concerns, particularly the potential for a trade war between the United States and China, following US President Donald Trump's decision to impose import tariffs.

Analysts have warned that if Bitcoin loses the "key" $75,000 support level, it could face further downside pressure. Ryan Lee, chief analyst at Bitget Research, told Cointelegraph that Bitcoin's drop below $80,000 amid investor fear from Trump's tariffs and market unrest points to a correction likely hitting $76,000-$78,000 this week, nearing $75,000 as a key support level based on historical patterns and trader sentiment.

However, some analysts are concerned that Bitcoin's correction may see the world's first cryptocurrency revisit $70,000. Based on its correlation with the global liquidity index, Bitcoin's right-hand side (RHS), which marks the lowest bid price someone is willing to sell the currency for, may fall below $70,000 around the end of February, after it peaked near $110,000 in January.

The first warning of a correction to $70,000 came from Raoul Pal, founder and CEO of Global Macro Investor, in a November X post, which also predicted that Bitcoin will reach a "local top" above $110,000 in January, before heading into the current correction.

Despite the poor investor sentiment, Bitcoin seems unlikely to fall to $70,000 before the end of the week. Given continued dip buying from large institutions such as Michael Saylor's Strategy, a plunge to $70,000 seems "less probable" without significant new downside catalysts, said Lee. However, a decline below $75,000 would add significant downside volatility by triggering nearly $900 million worth of leveraged long liquidations across all exchanges, CoinGlass data shows.

Bitcoin's current correction may last another two weeks,