Bitcoin Surges 5% to $105,700 on US-China Tariff Deal

Bitcoin (BTC) experienced a significant surge, breaking above $105,700 on May 12, following a major development in the ongoing US-China tariff talks. This move confirmed a bullish continuation setup with a projected price target of $150,000. The catalyst behind this breakout was the de-escalating trade tensions between the US and China, as US Treasury Secretary Scott Bessent and Chinese Vice President He Lifeng struck a deal in Geneva to reduce tariffs that had crippled bilateral trade for months. Under the agreement, the US will lower tariffs on Chinese goods from 145% to 30%, while China will reduce its duties on US imports from 125% to 10%.

This agreement triggered a broad-based market rally, with Bitcoin, often seen as a high-beta risk asset, benefiting from improved liquidity and risk appetite. The truce signals conditions historically favorable for BTC rallies, as increased investor caution had previously suppressed crypto inflows due to the trade war. The current Bitcoin rally follows the textbook breakout of a bull flag pattern on the weekly chart, a bullish continuation setup formed when the price consolidates downward in a parallel channel after a sharp upward move. In Bitcoin’s case, the flag began forming after BTC peaked at nearly $110,000 in January. The consolidation persisted for months until early May when the price broke above the flag’s upper trendline with a slight volume increase. This breakout confirms bullish continuation, with the pattern's projected upside target now sitting near $150,000, measured after adding the height of the initial flagpole to the breakout point. Momentum indicators, including the relative strength index (RSI), are also supportive, with weekly RSI rebounding above 65, reflecting renewed buying pressure without entering overbought territory above 70.

However, some analysts are urging caution as Bitcoin’s sentiment is becoming euphoric. André Dragosch, European Head of Research at Bitwise, notes that the firm’s Cryptoasset Sentiment Index has reached its highest level since November 2024, a level that previously aligned with local market tops. The chart shows that past peaks in sentiment, such as those in April 2022, October 2023, and November 2024, were followed by short-term corrections or sideways price action. This suggests growing optimism may be stretched, raising the risk of a near-term pullback despite Bitcoin’s strong long-term outlook. Bitcoin’s price was retracing following its climb above $107,000 as of May 12, with its daily RSI alarming about overbought conditions. The next support target sits around $100,000, aligning with its 0.786 Fibonacci retracement line. A decisive drop below the level could have BTC test its exponential moving average (EMA) supports below, with the 20-day EMA at around 97,385 as the initial downside target.