Impact of Trump’s 25% Tariff on Bitcoin: What You Need to Know

The recent announcement of a 25% tariff by President Trump on countries engaged in trade with Iran has heightened macroeconomic concerns, particularly for the cryptocurrency market. Despite these challenges, Bitcoin has shown signs of resilience, maintaining a range-bound movement near $90k. This article explores the implications of the tariff on Bitcoin and its potential impact on market sentiment and price movement.

Key Takeaways

Bitcoin has remained near the $90k mark even amidst economic uncertainties caused by a new 25% tariff targeting Iran.
The crypto market's Fear and Greed Index has improved, suggesting a shift toward neutral sentiment.
Long-term holder (LTH) behavior may indicate rising uncertainty, often seen in early bear market signs.
Historical patterns suggest that tariffs may affect Bitcoin negatively, resulting in a risk for future price drops.

Macro FUD returns as Trump imposes 25% tariff: Here's what’s at stake for Bitcoin

Market Sentiment and Accumulation Signals

Currently, the crypto market continues to display signs of accumulation. The Fear and Greed Index has recovered by 30 points, indicating a neutral sentiment shift since late November. Meanwhile, the total market capitalization remains stagnant around the $3 trillion mark. Bitcoin itself has been trading within a narrow range near $90k, suggesting a possible foundation forming, potentially setting it up for a push towards the $100k mark, especially as January has historically favored Bitcoin's upward movement.

BTC

Source: TradingView (BTC/USDT)

The Tariff Threat and Its Aftermath

The recent tariff announcement from President Trump, set at 25% for countries trading with Iran, arrived at a crucial moment. Despite this negative macroeconomic news, Bitcoin's 1.2% closing price at $92k reflects a certain structural resilience, suggesting that the market has begun to adapt to tariff-related tensions. However, it raises the question: Is this resilience evident in on-chain data? A more detailed examination is required to determine whether Bitcoin’s current behavior can truly be considered a solid accumulation phase.

Analyzing Bitcoin’s LTH Behavior

The real implications of Trump’s tariff lie in the larger strategic context. While a 25% tariff on Iran may not seem impactful at first glance, digging deeper reveals that China is Iran's largest trading partner, making up 30% of Iran’s total trade. This connection heightens the significance of long-term holder (LTH) metrics. Insights from Glassnode indicate that current LTH behavior is tied to “higher uncertainty,” a trend typically observed during early bear market stages.

Bitcoin

Source: CryptoQuant

Potential Risks Ahead

Given this scenario, another round of LTH distributions could emerge. The history of U.S.-China trade tensions has previously led to widespread fear, uncertainty, and doubt (FUD) in the market. For instance, after Trump’s imposition of a 100% tariff in October, LTH profits surged past $1.5 billion, and Bitcoin faced a significant 30% price decline. This leads us to ponder if we might witness similar reactions this time around.

At present, Bitcoin’s immediate support level hovers around $80k, which aligns with the average cost basis of ETF holders. However, with current market positions appearing tenuous and the tariff narrative once again coming into play, the downside risks appear to be accumulating.

Conclusion

The recent 25% tariff from President Trump introduces new complexities to the cryptocurrency landscape. While Bitcoin has shown some resilience, the potential for historical patterns to repeat themselves raises concerns about the sustainability of current price levels. As market conditions evolve, investors remain vigilant about the implications of macroeconomic shifts on Bitcoin's future.