Bitcoin drops 5% for third day in a row due to tariffs

Economic uncertainty and a strengthening dollar will hit Bitcoin, as institutional investors withdraw millions of dollars from ETFs.

The price of Bitcoin fell for the third day in a row, recording a loss of 5% and closing at $84,250. President Donald Trump's announcement of new 25% tariffs on European Union products generated panic in the markets, affecting cryptocurrencies as risk assets. The capitalization of the crypto market fell to $2.78 trillion, as institutional investors withdrew millions of dollars from Bitcoin ETFs.

Bitcoin price pierced the 200-period moving average (EMA200), a key support, sending a long-term bearish signal. / Trading View

Trump and tariffs: A blow to the crypto market

The President of the United States, Donald Trump, announced the imposition of 25% tariffs on products from the European Union, which generated a wave of uncertainty in the financial markets. This move, in the midst of the geopolitical crisis between Russia and Ukraine, injected panic into the Bitcoin market, considered a risk asset.

The implementation of these tariffs could have inflationary effects, which would put pressure on the Federal Reserve to keep interest rates high. This scenario benefits the dollar, whose DXY index rose to 106.47 points, while harming Bitcoin and other cryptocurrencies.

The impact on the crypto market

The reaction in the crypto market was immediate. Bitcoin fell by 5%, closing the day at $84,250, and dragged down the total market capitalization, which fell to $2.78 trillion. CoinMarketCap's fear and greed index fell to 20 points, approaching the extreme fear zone.

Despite the drop, some investors took the opportunity to withdraw Bitcoin from centralized exchanges. According to data from Coinglass, 8,977.15 BTC were withdrawn in the last 24 hours, suggesting long-term accumulation by "hodlers."

Institutional withdrawal and massive liquidations

The Bitcoin ETF market also suffered, with negative net flows of $937.90 million on Tuesday and $516.40 million on Monday. This institutional capital outflow contributed to the price drop of the main cryptocurrency.

In addition, the open interest (OI) in Bitcoin futures fell to $53.21 billion, its lowest level since November 11. This reflects a deleveraging and the liquidation of long positions, with $457.99 million in liquidations in the last 24 hours, of which 85.14% corresponded to long positions.

But the crypto market is ignoring the debt bond market. The 10-year Treasury bond yield fell to 4.25% so the market dynamics are sending mixed signals about the FED's policy. This suggests that the central bank's interest rates are higher than the market and could influence further cuts. Trump's policy of implementing cuts in public spending is the reason for the decline in yields.

Trend change?

The price of bitcoin pierced the 200-period moving average (EMA200), a key support, sending a long-term bearish signal. This drop was accompanied by a trading volume that doubled the 25-day average, showing the strength of sellers.

Although the RBP indicator suggests that Bitcoin is in the oversold zone in the short term, professional traders are waiting for confirmation in the coming sessions to determine if a trend change is consolidated.

As the crypto market faces economic and political uncertainty, investors are preparing for a possible bearish scenario. However, the accumulation of bitcoin by "hodlers" and the possible technical recovery could offer opportunities for those who remain calm in the midst of the storm.

Disclaimer: This news is for informational purposes only and does not constitute financial advice. Cryptocurrency investments are volatile and involve risks. Please do your research and consult a professional before making financial decisions.