Bitcoin Drops Below $100K as Trade War Fears Reignite, Analysts Remain Optimistic

Bitcoin (BTC) failed to maintain its six-figure price level on February 4, slipping below $100,000 after a fresh round of trade-war tensions triggered a market pullback. Despite this temporary setback, analysts are confident that Bitcoin's long-term bullish momentum remains intact.

BTC Price Reverses After Initial Rebound

Bitcoin’s price briefly surpassed $100,000 earlier in the week, buoyed by news that the U.S. would delay tariffs on Mexico and Canada by one month. Additionally, President Donald Trump signed an executive order to establish a sovereign wealth fund, signaling the administration's commitment to digital assets. The White House cryptocurrency director, David Sacks, is set to hold a press conference at 2:30 p.m. Eastern Time to announce U.S. digital asset policies, further adding to the optimism in the market.

Following a sharp rebound, BTC/USD surged by over $10,000 in a single day, climbing as high as $91,500 before continuing its rally. However, the price momentum stalled when China retaliated against U.S. tariffs with its own set of measures targeting oil, coal, and other sectors, reigniting fears of a renewed trade war. This caused Bitcoin to retreat by about 3% from its earlier gains, dropping below the $100,000 mark.

“It’s going to be a volatile day again,” said crypto trader Jelle, reflecting the uncertainty sparked by the escalating trade tensions.

Analysts Eye Bitcoin's Long-Term Potential

Despite the short-term price dip, many analysts remain optimistic about Bitcoin's prospects. Michaël van de Poppe, a well-known crypto trader and analyst, noted that Bitcoin’s swift rebound was a normal part of market volatility. He suggested that the cryptocurrency could reach new all-time highs (ATHs) in February, emphasizing that the market’s volatility should not be seen as a signal of long-term weakness.

“I assume we'll see new ATHs in February, and it’s quite normal to correct after such a strong bounce,” van de Poppe said. He added that as long as Bitcoin stays above the $93,000 mark, the path to a new ATH seems likely.

Other traders, such as Phoenix, speculated that the volatility could lead to the formation of a new short-term range for BTC, suggesting that the market may stabilize in the coming days after the initial shock.

Funding Rates Signal Bullish Momentum

A key indicator is also flashing bullish signals for Bitcoin. Axel Adler Jr., a contributor to the onchain analytics platform CryptoQuant, highlighted a significant shift in Bitcoin's funding rates. Funding rates on derivatives markets turned negative for the seventh time in 2024, a pattern that has historically preceded periods of strong bullish momentum. According to Adler, all six previous instances of negative funding rates have signaled the start of a price surge.

In addition, Bitcoin’s relative strength index (RSI) flashed a rare bullish signal on the 4-hour timeframe, further adding to the growing sense that the cryptocurrency market remains in a strong uptrend.

Market Outlook

While Bitcoin’s price dip below $100,000 may cause some short-term concerns, the underlying fundamentals remain positive. With continued institutional interest, favorable regulatory developments, and technical indicators pointing toward further gains, Bitcoin's prospects for reaching new all-time highs in the near future look promising.

As traders navigate through periods of heightened volatility, many are viewing the current price fluctuations as an opportunity rather than a setback. The overall market sentiment remains bullish, with Bitcoin likely to recover its losses and continue its upward trajectory in the coming weeks.