Bitcoin Plunges: Tariffs, ETF Outflows Spark $80K Fears

Bitcoin (BTC) has been grappling with a significant correction this week, with its price dropping to an intraday low of $86,007 on Tuesday. Market participants are now contemplating the possibility of a deeper correction that could push the price down to $80,000. The decline, which amounts to over 8% for the week, has been attributed to a combination of factors, including Donald Trump's announcement of planned tariffs on Canada and Mexico, as well as mounting liquidations and spot Bitcoin ETF outflows.

Strategy (MSTR), a company with a significant stake in Bitcoin, saw its stock decline by 11% on Tuesday as BTC dipped below $90,000. This decline has sparked concerns about a potential forced liquidation for the company. However, analysts from the Kobeissi Letter have dismissed this possibility, citing the structure of Strategy's convertible notes and the multiple price variables at play. Strategy generates capital by issuing 0% convertible notes to investors and using them to purchase Bitcoin, with its convertible notes not maturing until 2028.

Bitcoin ETFs have also experienced substantial outflows in recent days, with over $500 million withdrawn on Monday alone. Fidelity's FBTC and BlackRock's IBIT were among the funds with the highest outflows, totaling $246 million and $158 million, respectively. These outflows suggest a negative shift in investor sentiment, driven by market volatility and President Donald Trump's announcement of tariffs against Canada and Mexico.

Bitcoin's price analysis reveals a challenging recovery during the ongoing session, with sellers pushing the flagship cryptocurrency below $88,000. Bears are targeting the $85,000 level, and a break below this threshold could lead to a further decline to $80,000. Analysts had initially expected BTC to break above $100,000 last week, but macroeconomic conditions and the Bybit hack have dampened investor sentiment, leading to a significant price decline and ETF outflows.

Experts have attributed the change in sentiment to various factors, including the macroeconomic situation, the Bybit hack, and the lack of policy changes in the US that have lived up to investors' expectations. The sell-off has been described as a delayed reaction to the