Bitcoin’s price has fallen sharply in the past 24 hours, dropping over 5% to $95,279. The decline follows the announcement by former US President Donald Trump of new tariffs on imports from Canada, Mexico, and China. The cryptocurrency market has reacted negatively, with top-cap assets experiencing similar downturns due to heightened market uncertainty and large-scale liquidations.
Trump’s Tariff Move Triggers Market Jitters
Bitcoin, which had remained above $100,000 since mid-January, plummeted as much as 9.7% to a low of $91,530 on 3 February. The drop coincided with Trump’s announcement of a 25% tariff on goods from Mexico and Canada, along with a 10% levy on Chinese imports. These measures, set to take effect on 4 February, have fueled fears of an escalating trade war, prompting investors to shift away from riskier assets such as cryptocurrencies.
Market analysts suggest that this downturn is part of a broader “risk-off” move, where investors rebalance their portfolios across multiple asset classes. Trading firm QCP Capital noted that the sell-off is driven more by cross-asset market shifts than by any specific Bitcoin-related event. The firm also warned of ongoing volatility, particularly as Trump continues negotiations with Canada and Mexico while signalling potential tariffs on the European Union.
Massive Liquidations Exacerbate Bitcoin’s Decline
The sharp fall in Bitcoin’s price has triggered a wave of liquidations in the derivatives market, amplifying selling pressure. Over the past 24 hours, approximately $465 million in Bitcoin leverage positions have been liquidated. Notably, $389 million of these were long positions, indicating that bullish traders were forced to exit their positions, intensifying the downward momentum.
This cascading effect mirrors a similar event on 20 December 2024, when an 11% Bitcoin price drop resulted in over $419 million in long positions being liquidated. Analysts are now comparing the latest liquidation wave to that event, with more than $2.5 billion in total leverage positions wiped out across the crypto market.
Key Support Levels to Watch
Bitcoin’s latest decline has brought it close to a critical support level provided by the 100-day simple moving average (SMA), which currently stands at $93,899. Holding above this level is seen as crucial for Bitcoin’s short-term price stability.
Market indicators suggest that Bitcoin’s relative strength index (RSI) is at 38 points, approaching oversold territory. This could increase the likelihood of a short-term recovery. However, analysts caution that Bitcoin may continue to trade within a volatile range.
Trader Daan Crypto Trades highlighted that Bitcoin’s price action could remain choppy between $90,000 and $108,000 in the coming days. Should Bitcoin drop below the $90,000 support level, it could signal further losses. Conversely, reclaiming the 50-day SMA at $99,000 could indicate a potential reversal.
For now, investors remain cautious as market sentiment is shaped by global economic uncertainties and the evolving impact of Trump’s trade policies.
