Bitcoin Price Risks Drop to $71K as Trump Tariffs Hurt US Business Outlook

Bitcoin (BTC) is facing heightened risks of a price drop to $71,000 as new US trade tariffs introduced by President Donald Trump on April 2, 2025, create economic uncertainty, according to a new analysis by Charles Edwards, founder of quantitative Bitcoin and digital asset fund Capriole Investments. Trading at $83,453 on April 3, 2025, Bitcoin has already shown signs of strain, with the cryptocurrency reacting more severely to the tariffs than traditional US markets.

Tariffs Trigger Market Volatility

The announcement of worldwide reciprocal trade tariffs by President Trump sent shockwaves through financial markets, with Bitcoin bearing the brunt of the fallout. On April 2, BTC/USD plummeted by as much as 8.5%, while the S&P 500 managed to close the Wall Street trading session with a modest 0.7% gain. This stark contrast highlights Bitcoin’s sensitivity to macroeconomic shifts, particularly those tied to US policy.

Philadelphia Fed Business Outlook Survey vs. S&P 500. Source: Charles Edwards/X

Edwards pointed to the Philadelphia Fed’s Business Outlook Survey (BOS) as a key indicator of the brewing economic uncertainty. The survey, which measures business expectations in the Third Federal Reserve District, dropped below 15 for the first time since the start of 2024—a level seen only during significant economic downturns in 2000, 2008, and 2022. Notably, late 2022 marked the bottom of the most recent crypto bear market, when BTC/USD hit a low of $15,600 before reversing.

“Consider this as tariffs come in higher than expected,” Edwards told his X followers. “The Philly Fed Business Outlook survey is showing expectations today comparable to 2000, 2008, and 2022.” While acknowledging that the BOS can produce false signals, Edwards emphasized its historical correlation with high-risk periods, urging investors to remain vigilant, especially if the tariff situation escalates or corporate margins begin to erode.

Bitcoin Price Levels to Watch

Capriole Investments’ latest market update on March 31, 2025, outlined key technical levels for Bitcoin in the wake of the tariff-induced volatility. A daily close above $91,000 would signal a strong bullish trend, potentially reclaiming Bitcoin’s upward momentum. However, failure to break this resistance could see BTC/USD dip to the $71,000 zone, where Edwards predicts a “sizable bounce” might occur.

BTC/USD 1-day chart (screenshot). Source: Capriole Investments

The analysis aligns with broader market dynamics, as Bitcoin’s price movements are increasingly influenced by US macroeconomic policies. The tariffs, which aim to protect domestic businesses but risk driving inflation, as noted in a CoinShares report, could further pressure risk assets like Bitcoin in the short term. However, Edwards suggested that Bitcoin’s role as a hedge might strengthen if economic instability persists, a sentiment echoed in earlier posts by Bitcoin World News citing Arthur Hayes’ prediction of Bitcoin reaching $250,000 in 2025 if the Federal Reserve shifts to quantitative easing (QE).

A Potential Lifeline: Rising Liquidity and M2 Money Supply

Despite the immediate risks, there may be a silver lining for Bitcoin and other risk assets. Edwards highlighted the possibility of increasing global liquidity, particularly in the US, where the Federal Reserve has already begun to ease its tight financial policies. Speculation about a return to quantitative easing (QE) has been growing, with Edwards posing the question, “How long until the Powell printer starts humming?”

Analyst Colin Talks Crypto echoed this optimism in an X thread, predicting a significant influx in the M2 money supply—a metric that measures the total amount of money in circulation, including cash, checking deposits, and easily convertible near money. Historically, increases in M2 money supply have correlated with major Bitcoin price surges, as noted in a Sarson Funds report. Colin Talks Crypto’s comparative chart suggested that this influx could spark a BTC price rebound as early as May 2025.

The potential for QE and rising liquidity offers hope for Bitcoin investors, as these conditions have previously fueled bullish trends in the crypto market. A 2020 study from the International Journal of Economics and Financial Issues observed a notable boom in cryptocurrency markets following the Federal Reserve’s unlimited QE announcement on March 23, 2020, underscoring the historical link between monetary policy and crypto performance.

US M2 money supply vs BTC/USD chart. Source: Colin Talks Crypto/X

Navigating an Uncertain Future

Bitcoin’s current price of $83,453 reflects a market at a crossroads, with US trade tariffs introducing significant downside risks while potential liquidity increases offer a glimmer of hope. Investors will need to closely monitor key levels like $91,000 and $71,000, as well as broader economic indicators such as the Philly Fed BOS and Federal Reserve policy decisions. As the tariff situation unfolds, Bitcoin ability to weather this storm—and potentially emerge stronger—will be a critical test of its resilience in an increasingly volatile global economy.