Bitcoin Price Analysis: BTC Holds Steady Around $96,000 As Market Sentiment Dampens

Bitcoin (BTC) has been marginally up over the past 24 hours. The weekend did not witness significant price action, and several factors hindered market sentiment and risk appetite. 

According to analysts, global trade war concerns could pressure BTC and drive it toward $93,000 in the short term. Trump tariffs have also impacted market sentiment. However, despite market sluggishness, ETF inflows have remained slow, extending a six-week streak and helping shore up the price. Talks about a strategic Bitcoin reserve have also lifted institutional demand. 

Fed Unlikely To Cut Interest Rates 

Lower US unemployment, steady wage growth, and rising consumer expectations have dampened hopes for a rate cut. According to the CME FedWatch Tool, the chances of the Fed maintaining current interest rates rose from 60.7% to 73.8% in the week ending February 7. Higher rates could raise borrowing costs and impact demand for risk assets. The prospect of higher interest rates pulled BTC down from above $100,000 to $95,700 on February 7. 

Additionally, US-China trade tensions have added to the uncertainty in the markets. Donald Trump’s administration has announced 10% tariffs on Chinese goods. China has also announced retaliatory tariffs, leading to an escalation in trade tensions. While BTC rebounded, uncertainty about whether the US and China could avoid a trade war remains. A full-blown trade war between the two giant economies could adversely impact global markets and influence the Fed’s monetary policy. Trump’s tariffs could push prices higher, raise inflationary pressure, and prompt a hawkish stance from the Fed. 

A global trade war could be a double-edged sword for Bitcoin. Tariffs could increase investor uncertainty due to a negative impact on the market. However, they only pose a short-term risk for Bitcoin, according to James Wo, the founder and CEO of DFG. 

“Trade war concerns may also increase the dollar’s debasement, leading to higher inflation and drive demand for US dollar alternatives. This is what Bitcoin was originally intended for, a hedge against fiat devaluation and inflation, which might see Bitcoin ultimately benefitting from the flight away from weakened fiat currencies to push its price higher over time.”

Bitcoin (BTC) Could Crash Due To A Strategic Reserve 

Arthur Hayes, the former CEO of Bitmex, has criticized the idea of a Bitcoin Strategic Reserve and regulatory policies regarding crypto under the Trump administration. Hayes argued that many in the crypto space mistakenly believe government intervention would benefit the industry. Hayes stated, 

“Broadly speaking, many misguided crypto folks wish for the U.S. government to print dollars and purchase bitcoin as part of a national stockpile and to enact regulatory moats around crypto businesses in which they have a financial interest.”

Hayes added that government-controlled reserves of the asset could be manipulated for political reasons instead of sound financial strategy. 

“Let’s assume that Trump can create a BSR. The government buys one million Bitcoin, as suggested by U.S. Senator Lummis. Boom! The price goes nuts. Then, the buying concludes, and the up-only trend channel stops.”

Hayes also argued that a Bitcoin reserve would create volatility instead of stability, noting that a future administration could view the reserve as a ready source of liquidity. 

“There are one million Bitcoin just sitting there, ready to be sold; it just takes a signature on a piece of paper. The market would rightly fear when and how these Bitcoin would be sold.”

Bitcoin (BTC) Price Analysis 

Bitcoin (BTC) has had a muted weekend, with the price tethered around the $97,000 level. The flagship cryptocurrency has support at $96,000 and $93,000 and risks a significant downturn if it dips below these levels. BTC has struggled to build momentum after slipping below $100,000 after market sentiment and risk appetite were dampened by a trade war between the US and China. The US has imposed a 10% tariff on Chinese goods, with China imposing retaliatory tariffs. 

However, things could get significantly worse for BTC if it dips below a key support level. If BTC slips below this level, it could trigger a significant liquidation event, wiping out over $1.3 billion worth of leveraged long positions. To avoid such a scenario, BTC must remain above $93,000, according to Ryan Lee, Chief Analyst at Bitget. The analyst stated, 

“Watch for Bitcoin's support at $90,500, $93,000. Dropping below $90,500 might indicate bearish trends. These levels could shape market sentiment depending on how Bitcoin trades around them.”

An escalating trade war could increase economic uncertainty, pushing BTC below $90,000 in the short term. 

BTC started the week facing considerable volatility as the price plunged following Donald Trump’s imposing tariffs on Canada, Mexico, and China. As a result, BTC dropped to an intraday low of $91,274 on Monday. It recovered from this level to reclaim $100,000 and settle at $101,579, ultimately registering an increase of nearly 4%. BTC’s rally failed to sustain momentum as the price dropped 3.54% on Tuesday to go below $100,000 and the 50-day SMA and settle at $97,979. Sellers retained control on Wednesday as the price fell 1.34% to $96,668.

Source: TradingView

Buyers attempted a recovery on Thursday as BTC rallied to an intraday high of $99,237. However, it lost momentum after reaching this level and fell to $96,641. BTC briefly moved past $100,000 on Friday, reaching $100,222 before dropping to $96,634. Price action was muted on Saturday as BTC registered a negligible increase. The current session sees BTC down marginally as sellers look to drive the price below $96,000. If this level is breached, BTC could drop to $93,000. A break below this level could see BTC drop to $90,000, triggering liquidations that could lead to a deeper correction. The RSI and MACD indicate bears have the advantage. However, if buyers can build momentum, BTC could reclaim $100,000.

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.