The world's leading cryptocurrency Bitcoin continues to trade below the $89,000 mark since early March, with analysis showing the price weakness emerged before the recent US-initiated trade tensions.
Market data indicates Bitcoin has been unable to maintain levels above $89,000 since March 7, despite gaining 2.2% on April 1. While many observers initially linked the cryptocurrency's lackluster performance to President Trump's January 21 announcement of Chinese import tariffs, the downward trend was evident months earlier.
The asset had repeatedly failed to hold above $100,000 in the three months preceding the trade war announcement, even as traditional markets like the S&P 500 reached record highs in February. Strategy's substantial $5.25 billion Bitcoin purchases since February have apparently helped maintain support around the $80,000 level.
Institutional engagement has remained robust, with spot Bitcoin ETFs attracting $2.75 billion in net inflows during the three weeks following the initial tariff announcement. This continued even as trade tensions escalated with Canada, Mexico, and retaliatory measures from China and the EU.
Market sentiment has been particularly impacted by unfulfilled expectations around Trump's campaign promise of a "strategic national Bitcoin stockpile." The March 6 executive order fell short of trader hopes, contributing to dampened enthusiasm.
Economic factors are playing a key role, with February's US Personal Consumption Expenditures Price Index showing controlled inflation at 2.5% year-over-year. This represents a stark contrast to 2022's environment when Bitcoin thrived amid 5%+ inflation rates.
The weakening job market has also influenced investor behavior, with US job openings reaching near four-year lows in February. Lower yields on US 2-year Treasury bonds, now at 3.88%, suggest investors are favoring safer assets in the current economic climate.
While global trade tensions have added to market uncertainty, Bitcoin's current performance appears to stem from a combination of unmet expectations, moderating inflation, and broader economic concerns driving risk-averse behavior among investors.