Bitcoin Dips Below $85K Amidst US Dollar Strength
Bitcoin Price Volatility and US Dollar Strength
Bitcoin (BTC) experienced significant volatility on March 4th, trading below $85,000. This downturn follows a recent peak, representing a drop of over $10,000 from its previous day's high. The weakening crypto market, coupled with the impact of US trade tariffs, contributed to this price decline.
Data from Cointelegraph Markets Pro and TradingView shows BTC/USD hitting a new low of $82,037 on Bitstamp before rebounding slightly.
BTC/USD 1-hour chart. Source: Cointelegraph/TradingView
Impact of US Tariffs and Macroeconomic Factors
The newly implemented US tariffs against Mexico and Canada, alongside the ongoing uncertainty surrounding a US strategic crypto reserve, further impacted the market sentiment. This uncertainty was amplified by the lack of clarity ahead of the March 7th White House Crypto Summit.
QCP Capital highlighted the role of these tariffs in its analysis, stating that the sell-off was exacerbated by investor concerns regarding escalating trade tensions and their effect on stock markets. They also noted the potential impact on President Trump given the crypto community’s past support.
Even the SEC's recent move to pause and dismiss enforcement cases against crypto firms failed to prevent the sell-off, emphasizing the broader market risk aversion.
Total crypto market cap 1-day chart. Source: Cointelegraph/TradingView
Potential for Short-Term Recovery
Despite the bearish sentiment, Mosaic Asset offered a more optimistic short-term outlook, pointing to oversold conditions and historical market trends for potential rallies. They cited the historically weak performance of the S&P 500 in late February and its strong performance in March as a potential catalyst.
S&P 500 cycle comparison. Source: Mosaic Asset
US Dollar Index and Bitcoin's Future
The US dollar index (DXY) reached 12-week lows before experiencing a modest rebound. This macroeconomic factor also plays a role in Bitcoin's price fluctuation.
US dollar index (DXY) 1-day chart. Source: Cointelegraph/TradingView
Disclaimer: This article does not provide financial advice. Conduct thorough research before making investment decisions.
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