Bitcoin (BTC) price plummeted 8% to $93,101 on Monday, marking its sharpest single-day decline in three months. This happened as global markets reacted to outgoing President Donald Trump’s newly announced tariffs.
According to CoinGlass data, the crypto market saw over $1.3 billion in leveraged positions liquidated within 12 hours. This included $300 million in Bitcoin and $400 million in Ethereum (ETH).
Tariff Turmoil Triggers Crypto Carnage
On February 1, President Trump unveiled tariffs of 25% on imports from Canada and Mexico. As well as, 10% on Chinese goods, set to take effect on February 4, 2025.
The European Union pledged retaliation, while BBC sources suggested the UK might secure exemptions. Markets responded immediately: The CoinDesk 20 Index tumbled 17%, Ethereum plunged 20% to $2,500, Solana (SOL) slid 13% to $184, XRP crashed 28% to $2.00, and Trump’s namesake memecoin (TRUMP) fell 12%.
Bitcoin’s drop coincided with a 4% rally in the U.S. Dollar Index (DXY) since October 2023, intensifying pressure on risk-sensitive assets.
Bitcoin ETFs and Dominance Defy Sell-Off With Record Inflows
Despite the broader market turmoil, U.S. spot Bitcoin ETFs attracted $4.94 billion in net inflows during January 2024. BlackRock’s iShares Bitcoin Trust (IBIT) led with $3.2 billion, followed by Fidelity’s FBTC at $1.3 billion, Bitwise’s BITB with $125 million, and Grayscale’s Mini Trust adding $398.5 million.
Bitwise Chief Investment Officer Matt Hougan projected annual inflows could reach $50 billion, drawing parallels to gold ETFs, which doubled flows in their second year between 2004 and 2005.
Bitcoin’s market share rose to 60.59%, per CoinMarketCap, as investors flocked to its liquidity during the volatility.
Jeff Park, Head of Alpha Strategies at Bitwise, labeled Bitcoin his “highest conviction macro trade,” comparing current trade tensions to the 1985 Plaza Accord, which weakened the U.S. dollar and fueled inflation in trading partners.
Analysts Split on Short-Term Bitcoin Price Prediction
Traders braced for further volatility as U.S. futures markets reopened. Ryan Lee of BitGet Research Bitcoin price prediction forecast a correction to $95,000, while BitMEX co-founder Arthur Hayes reiterated warnings of post-inauguration sell-offs.
Pseudonymous analyst Van Nuener cautioned that “downward pressure” could persist. The DXY’s strength and China-related risks—including potential Nvidia export restrictions and the rise of DeepSeek R1, an open-source AI competitor—added to market uncertainty.
Bitcoin Price Key Factors to Monitor
Critical variables influencing Bitcoin’s trajectory include the implementation details of Trump’s tariffs, global retaliation measures, sustained ETF demand, the DXY’s momentum, and escalating U.S.-China tech tensions.
The Wall Street Journal editorial board criticized Trump’s policy as the “Dumbest Trade War in History,” yet Bitcoin’s growing institutional ETF adoption may provide stability amid the chaos.
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