Bitcoin Faces Potential Drop Below $90K as U.S.-China Trade Tensions Escalate With New Tariffs

Bitcoin’s price dropped below $100,000 on Feb. 4, with fears of a global trade war leading to increased volatility. The Ministry of Finance of the People’s Republic of China announced new tariffs of up to 15% on certain U.S. imports, set to take effect on Feb. 10. This move followed U.S. President Donald Trump’s Feb. 1 executive order imposing tariffs on goods from China, Canada, and Mexico. The growing trade tensions between the U.S. and China have sparked concerns that Bitcoin could experience a correction below $90,000.

Ryan Lee, chief analyst at Bitget Research, explained that tariff increases could lead to more volatility for Bitcoin and other risk assets. He suggested that the uncertainty surrounding the trade war might prompt investors to seek Bitcoin as a hedge against inflation and currency devaluation. However, he cautioned that broader market instability could trigger a sell-off, pushing Bitcoin’s price lower than $90,000.

James Wo, the founder and CEO of venture capital firm DFG, agreed, pointing out that large economies imposing tariffs often result in significant market drawdowns. While he acknowledged that a prolonged trade war might devalue the U.S. dollar and contribute to inflation, he also noted that it could lead to higher global demand for alternative assets, including Bitcoin.

Bitcoin's price is currently under pressure, and any further dip below $97,000 could lead to over $1.3 billion in leveraged long liquidations across exchanges, according to data from CoinGlass. After briefly recovering, Bitcoin found a temporary bottom around $96,200, but it remains at risk of further declines due to global economic uncertainty.

If the Federal Reserve lowers interest rates in response to economic stress caused by the trade war, it could provide liquidity to the market, benefiting Bitcoin’s price. Rising inflation concerns due to the tariffs could further encourage investors to turn to Bitcoin as a safe-haven asset.

The ongoing trade tensions have already significantly impacted traditional markets, and Bitcoin is not immune to these global developments. Investors are closely watching upcoming discussions between President Trump and Chinese President Xi Jinping, which could determine whether a full-scale trade war is avoided. These talks will likely play a key role in shaping the future of both traditional markets and Bitcoin in the coming weeks.

Bitcoin’s price faces downward pressure as trade war concerns intensify. It could potentially correct below $90,000 if the market continues to react to the uncertainty surrounding U.S.-China relations. While the tariff increases could trigger short-term volatility, the situation also presents an opportunity for Bitcoin to serve as a hedge against economic instability.