Why is Bitcoin's Price Stuck?

Why is Bitcoin's Price Stuck?

Bitcoin’s price has been caught in a narrow range, trading within a $4,500 band since February 5. Despite reaching for the $98,000 mark, the cryptocurrency has struggled to break through this resistance, showing little movement in either direction. Several factors are contributing to Bitcoin's stagnation, with a combination of macroeconomic uncertainty and technical levels playing key roles in this consolidation.


Uncertainty Surrounding New Tariffs

A major factor impacting Bitcoin’s price is the recent announcement from U.S. President Donald Trump to impose a 25% tariff on steel and aluminum imports. This new tariff is escalating the ongoing trade war, which is creating significant uncertainty in the markets.


The fears stemming from these tariffs include potential inflationary pressures, which could force the Federal Reserve to maintain or even hike interest rates. Higher interest rates generally make riskier assets like Bitcoin less attractive, pushing investors toward safer alternatives such as bonds. This has led to a sell-off in the crypto market, with Bitcoin and other digital assets experiencing substantial liquidations. Just last week, over $2 billion in crypto positions were liquidated following similar tariff news.


Investment firm QCP noted that the tariff news could reignite trade tensions and stated that “BTC volatility now skews in favor of puts until April, reflecting a lack of upside catalysts.” This uncertainty surrounding trade policies and inflationary pressures is weighing heavily on Bitcoin’s ability to gain momentum.


Bitcoin Trapped Between Two Key Trendlines

Another reason for Bitcoin’s lack of price movement is its current position between two critical technical levels. Since February 5, Bitcoin’s price has been caught between the 50-day simple moving average (SMA) at around $99,709 and the 100-day SMA at $95,825.


The market has been exhibiting signs of indecision, with doji candlesticks forming over the past four days. This pattern indicates a tug-of-war between the bulls and bears, as neither side has been able to seize control.


For Bitcoin to break free from its current consolidation, it needs to flip the 50-day SMA to the upside, which would pave the way for a challenge of the psychological $100,000 resistance level. However, if Bitcoin loses the 100-day SMA as support, it could face a deeper correction, with further downward pressure potentially in the cards.


A look at the Bitcoin liquidation heatmap reveals heavy sell orders around the 50-day SMA and significant buy orders just above the 100-day SMA, further emphasizing the importance of these two levels.


Conclusion: Stuck in Limbo

In summary, Bitcoin’s price is currently stuck in a tight range due to a combination of external market factors and technical resistance levels. The uncertainty created by Trump’s new tariffs has added to market volatility, while Bitcoin’s struggle to break above or below key moving averages has created a period of consolidation. Traders and investors will need to closely monitor these levels for any signs of a breakout or breakdown, as Bitcoin remains trapped in a precarious balance. Until either the tariff situation stabilizes or Bitcoin can establish a clear trend, cryptocurrency is likely to remain rangebound for the time being.

Disclaimer: The content on this website is for informational purposes only and does not constitute financial or investment advice. We do not endorse any project or product. Readers should conduct their own research and assume full responsibility for their decisions. We are not liable for any loss or damage arising from reliance on the information provided. Crypto investments carry risks.