Bitcoin Dips Below $113K Despite US-EU Tariff Deal

Bitcoin Retreats Despite US-EU Trade Agreement

Bitcoin is experiencing a downturn, erasing yesterday's gains. This decline occurs even as the U.S. and the E.U. finalized details of their trade agreement addressing tariffs initially imposed by the Trump administration.

TradingView data indicates Bitcoin has fallen below the $113,000 mark. BTC dropped from an intraday high of around $114,800 and is currently trading near $112,200.

The U.S. and E.U. agreement involves the U.S. imposing a 15% tariff on E.U. goods, a reduction from the original 30%. Notably, U.S. imports of cars and other industrial goods from the E.U. are exempt, as are aircraft, aircraft parts, generic pharmaceuticals, and pharmaceutical ingredients.

While the tariff deal was initially reported in late July, a formal agreement was recently signed. The market may have already factored this news in, given the previous crypto market rally.

U.S. Commerce Secretary Howard Lutnick stated the E.U. has agreed to open its $20 trillion market as part of the agreement.

Factors Contributing to Bitcoin's Decline

Several factors may explain Bitcoin's current price action:

• Diminished Expectations of Fed Rate Cut: The likelihood of a 25-basis-point (bps) September Fed rate cut has decreased, from 99% to 71%. Rate cuts generally boost risk-on assets like crypto by increasing liquidity.
• ETF Outflows: Bitcoin ETFs are experiencing significant outflows. These funds have seen four consecutive days of net outflows, totaling nearly $1 billion.

The outflows have forced BTC ETF issuers to sell portions of their holdings. For example, BlackRock sold over $111 million in BTC following $220 million in ETF outflows yesterday.