Bitcoin (BTC) tumbled to $82,400, testing 250-day moving average. The decline reflects mounting macroeconomic risks, regulatory uncertainty, and a tightening correlation with traditional markets. Here’s what’s driving the drop and what investors should expect next.
Table of Contents
Three primary factors fueled the Bitcoin’s sell-off
- Trump’s Tariff Threats
President Trump’s upcoming “Liberation Day” tariffs (April 2) targeting imports from Canada, Mexico, and China sparked a risk-off market sentiment. Investors fled to gold (up 19% YTD) and Treasuries, pressuring risk assets like Bitcoin. The tariffs could trigger retaliatory measures, disrupting global trade flows and inflation dynamics. - Sticky Inflation Data
February’s core PCE inflation rose unexpectedly to 2.8%, exceeding forecasts and reviving stagflation fears. Bitcoin, increasingly viewed as a risk-on asset, dropped 3% immediately after the report. - Regulatory Scrutiny
Congressional hearings on stablecoin regulation and former SEC Commissioner Paul Atkins’ policy clashes dampened crypto market sentiment. Investors fear delayed pro-crypto legislation under Trump’s administration.
Bitcoin’s Near-Term Outlook
- Key Support Levels: $76,600 (March low) and $80,000 (psychological threshold and 8-month uptrend line) must hold to prevent deeper declines.
- ETF Inflows: Despite March’s dip, Bitcoin ETFs attracted $950 million in inflows, signaling institutional accumulation. BlackRock CEO Larry Fink predicts renewed momentum toward $100,000 if tariffs resolve favorably.
Bitcoin vs. Stock Market: A Tightening Correlation
Bitcoin’s movement this year is highly correlated with the S&P 500 and Nasdaq. This alignment means:
- Shared Risks: Both markets now react similarly to macroeconomic shocks (e.g., tariffs, inflation).
- Diversification Doubts: Bitcoin’s role as a “digital gold” hedge weakens as it mirrors stock volatility.
| Metric | Bitcoin | S&P 500 | Nasdaq |
|---|---|---|---|
| YTD Performance | -11.6% | -4.6% | -10.4% |
Will Stocks Follow Bitcoin’s Lead?
While correlated, fundamentals differ:
- Stocks: Defensive sectors (utilities, healthcare) outperform amid recession fears. Tech remains pressured by tariffs and China risks.
- Bitcoin: More sensitive to liquidity shifts. A Fed rate cut (priced at 35% for June) could disproportionately boost crypto vs. equities.
Investor Takeaways
- Monitor Tariff Impact: Clarity post-April 2 could stabilize both BTC and stocks.
- Watch Correlation Trends: A decoupling from equities would restore Bitcoin’s hedge appeal.
- Key Levels: For BTC, hold above $80,000; for stocks, defend S&P 5,500 support.
Bitcoin’s path hinges on macroeconomic policy and regulatory developments. While short-term pain persists, its historical resilience and institutional demand suggest a rebound is brewing—provided global markets avoid a full-blown trade war.
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