Bitcoin Price Takes a Hit Amid Economic and Geopolitical Tensions

Bitcoin's price has continued its downward trend, with the cryptocurrency suffering a 7% drop on February 28, bringing its value below the $80,000 mark. This latest decline pushes Bitcoin’s weekly losses to nearly 18%, marking the largest weekly drawdown since November 2022. The broader crypto market is also feeling the impact of these market movements, with the total market capitalization down by 8.5% over the same period.

Trump’s Tariff Announcement Weighs on Bitcoin and the Market

The primary catalyst for this latest slump appears to be U.S. President Donald Trump’s announcement on February 27 regarding new tariffs on goods from China. The president revealed that a 10% tariff would be added to Chinese imports, which would raise the total tariff on Chinese goods to 20% by March 4. Additionally, Trump reiterated his plans to implement a 25% tariff on Canadian and Mexican imports, effective on the same date.

These developments have heightened concerns over global trade relations and economic instability, which in turn have affected investor sentiment in both traditional markets and cryptocurrencies. Following the tariff announcement, U.S. equities experienced a 1.5% decline, while Bitcoin’s price continued to suffer. As geopolitical tensions escalate, the crypto market is seeing increased selling pressure, exacerbating the price drop.

Spot Bitcoin ETFs See Massive Outflows

Another contributing factor to Bitcoin’s price decline is the significant outflow of funds from Bitcoin exchange-traded funds (ETFs). During the month of February, approximately $3.65 billion was withdrawn from spot Bitcoin ETFs, with $1.1 billion of that total occurring on February 25, marking the largest single-day outflow since these ETFs were launched.

This trend of outflows, which began on February 18, has raised concerns about weakening demand for Bitcoin-backed financial products. The ETF withdrawals signal that investors may be growing cautious about the future price trajectory of Bitcoin, particularly in light of ongoing macroeconomic challenges.

Ki Young Ju, the founder of CryptoQuant, suggested that this weak demand for Bitcoin spot ETFs could persist for some time, implying that a price recovery for the cryptocurrency may take longer than expected.

Bitcoin Fills CME Gap: Is $70K on the Horizon?

As Bitcoin’s price continues to dip, it is now filling a fair value gap (FVG) between $80,000 and $77,000, an area identified by market analysts as a critical support zone. Bitcoin’s price recently fell below $80,000 for the first time since November 2024, and analysts are watching closely to see if this level will provide enough support for a recovery.

If the $77,000-$80,000 range fails to halt the decline, Bitcoin could be headed towards the $74,000 level, which marks the prior all-time high set in March 2024. Some traders, including the anonymous crypto trader known as Magus, believe that the next stop could be as low as $70,000.

This level is significant because it coincides with the price of Bitcoin on U.S. election day, a price point that has historically not been revisited after moving higher in both 2016 and 2020. Despite the potential for a short-term bounce, Magus expects Bitcoin’s price to continue its downward trajectory until it reaches the $70,000 level, where further support may materialize.

The RSI Indicates Oversold Conditions

While Bitcoin's price continues to drop, the relative strength index (RSI) for the cryptocurrency has reached oversold levels on the daily timeframe. The RSI is currently at its lowest point since August 2023, when Bitcoin was trading around $25,000. Oversold conditions often suggest that an asset is due for a potential bounce, but traders remain cautious given the broader macroeconomic pressures.

The coming days will be crucial in determining whether Bitcoin can find support at its current levels or if the price will continue to spiral downward. Traders and investors are closely monitoring the market, especially in light of geopolitical uncertainties and ongoing economic concerns.