Bitcoin relief rally fizzles as White House confirms 104% China tariffs — Will BTC fall to new lows?

Bitcoin’s Brief Rally Halted by Tariff News

Bitcoin’s price action took a sharp turn this week, erasing recent gains after the White House confirmed significant tariff hikes on Chinese goods. A brief, hopeful surge towards $81,180, reportedly fueled by speculation about a potential pause in US tariffs, quickly evaporated. The confirmation that 104% tariffs are set to proceed has reintroduced significant uncertainty into the markets, impacting not just crypto but traditional equities as well.

The S&P 500 also saw intra-day gains wiped out following the tariff confirmation, highlighting the broad market impact of this geopolitical development. For Bitcoin, this meant a slide back below the crucial $75,000 mark for the first time since early November 2023, pushing the leading cryptocurrency towards potentially critical support zones.

Technical Levels: Eyes on the “Fair Value Gap”

As Bitcoin retraces, traders are closely monitoring key technical levels. A significant area of interest is the “fair value gap” (FVG) located between approximately $73,400 and $77,000. This zone emerged during the market volatility seen in November 2023 and is now being viewed as a potential demand zone where buyers might step in.

Prominent crypto analyst Michael van de Poppe suggested prior to the drop that Bitcoin might need to revisit this specific zone before resuming its upward trajectory. He noted:

“Bitcoin attacking $80,000 is a strong sign,” but emphasized the importance of potentially retesting lower levels first.

Analyst Jelle also commented on Bitcoin’s relative strength earlier in the week, finding its ability to close above $79,000 after a dip towards $74,400 impressive, especially when compared to the performance of equities during the same period. However, the renewed tariff pressure has shifted the immediate outlook.

On-Chain Signals: Are Long-Term Holders Preparing to Sell?

Adding to the bearish sentiment are signals from on-chain data. Analytics platform CryptoQuant highlighted a potential increase in selling pressure from long-term Bitcoin holders (LTHs) – those holding BTC for over 155 days.

The Exchange Inflow Coin Days Destroyed (CDD) metric, which tracks the volume of long-dormant coins moving to exchanges, saw a significant spike recently. A rising CDD often indicates that experienced holders might be preparing to sell, potentially taking profits or de-risking their positions.

A CryptoQuant contributor, IT Tech, noted that previous spikes in this metric have often preceded price drops:

• A spike earlier this month coincided with a drop from $88,000 to $81,000 (Note: These price levels seem high compared to current market, potentially referring to different assets or analysis context, but the correlation principle holds).
• A similar spike in late March preceded a roughly 7% price decline over two days.

Observing the latest spike, the analyst questioned whether LTHs were indeed “preparing to sell again?” If this pattern holds, Bitcoin could face continued downward pressure in the coming days.

Market Outlook: Tariffs, Technicals, and Uncertainty

The confluence of negative macroeconomic news (China tariffs) and potentially bearish on-chain signals (rising CDD) creates a challenging environment for Bitcoin bulls. The market has effectively erased gains spurred by earlier optimism, with sentiment shifting rapidly.

As one tweet noted, the broader crypto market dump is linked to weakness in traditional markets like the Nasdaq, suggesting interconnected risk-off sentiment. The tweet further speculated:

“I think there’s still some pain ahead, as the tariff war is not over… The worst scenario could [lead to a test of $67k].”

For now, the immediate focus remains on the identified support levels. The $73,400 – $77,000 fair value gap represents a key zone. Below that, the March 2024 all-time high area near $74,000 could act as the next significant line of defense. A failure to hold these levels could open the door to further downside, potentially testing levels mentioned by market commentators, such as $67,000.

Conclusion: Caution Advised

Bitcoin’s relief rally proved short-lived, quickly succumbing to renewed geopolitical tensions stemming from the confirmed US tariffs on China. With technical support levels being tested and on-chain data hinting at potential selling from long-term holders, the path ahead appears uncertain. Traders and investors will be watching closely to see if Bitcoin can find stability within the key support zones or if further lows are imminent.

Disclaimer: This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.