Is Bitcoin price going to crash again?

Bitcoin (BTC) is up 16% from the four-month low of $76,600 to reach $88,700 on March 24. The price has since hovered around $85,000 on April 2. 

The latest rejection from the $85,500 resistance level raises questions about whether BTC price could drop further over the next few days.

Trump’s tariffs could drive Bitcoin prices lower?

April 2 marks what US President Donald Trump dubbed “Liberation Day,” unveiling sweeping reciprocal tariffs targeting imports from numerous countries. Market participants are concerned this might trigger another sell-off in cryptocurrencies, pushing prices lower.

Key takeaways:

The proposed tariffs include a 25% levy on auto imports and broad duties on goods from nations like China, Canada, and Mexico.

While these measures aim to reduce the US trade deficit and bolster domestic manufacturing, they could result in inflation and a risk-off mood.

This could spook investors in the global market, with risk-on assets like Bitcoin bearing most of the brunt.

For instance, when Trump imposed tariffs on Canada, Mexico, and China in early March, Bitcoin dropped from $105,000 to $92,000 overnight.

Commenting on the current risk-asset landscape, trading firm QCP Capital emphasized the effects of Trump’s trade tariffs release today, especially as investors brace for retaliatory measures from affected nations. 

“The US seems increasingly intent on isolating itself in pursuit of more favorable trading terms,” the firm said in a Telegram note to investors, adding that the targeted countries are “not likely to concede.”

QCP also pointed out that “rather than fracturing under pressure,” global players appear to be closing ranks, particularly after a meeting by officials from China, Japan and Korea to explore deeper regional trade cooperation.

“In the short term, we expect all risk assets to remain under pressure.”

Inflationary pressures and a shift to safe havens

Trump’s tariffs are widely expected to fuel short-term inflation, a dynamic that typically pressures risk-on assets like Bitcoin. 

Key points:

Higher import costs translate to rising consumer prices, prompting a flight to traditional safe-haven assets such as gold, which hit a record high of $3,150 per ounce this year, or US Treasurys. 

Unlike gold, Bitcoin has yet to fully establish itself as a reliable inflation hedge in the eyes of investors. 

While some view it as “digital gold,” BTC price remains highly correlated to stocks. 

The February 2025 crypto crash, which saw $2 billion in liquidations after earlier tariff announcements, underscores this vulnerability. 

Liquidity could tighten as the Fed is signaling a cautious approach to rate cuts.

Lowering of interest rates, for example, is unlikely before June, despite one Fed meeting scheduled in the interim, according to CME Group’s FedWatch Tool.

Related: Bitcoin price can hit $250K in 2025 if Fed shifts to QE: Arthur Hayes

Bitcoin price analysis sees a ‘lot of volatility’ ahead

Bitcoin’s price is notoriously prone to overreactions, amplified by leveraged trading in the crypto derivatives market. The uncertainty surrounding the scope and retaliation to Trump’s April 2 tariffs could spark panic selling, triggering a cascade of liquidations.

“Today is the day where the Trump administration shares details about the proposed tariffs on the rest of the world,” popular trader Daan Crypto Trades wrote on X. 

Market participants have been looking forward to this event over the last few weeks, which has caused a lot of uncertainty. 

“Depending on the severity of the tariffs and how the market interprets it, a larger move is due,” the trader said, adding:

“Regardless of what happens, a lot of volatility is pretty much a guarantee today.”

Others doubted the severity of Trump’s tariffs, with analyst and entrepreneur Michaël van de Poppe arguing that it could be “a big non-event or an event that’s heavily priced into the markets.”

“I would expect the markets to go back to neutral after today is over.”

Fellow analyst AlphaBTC believes that Bitcoin price must hold above $84,000 to avoid deeper corrections. 

The analyst shared a chart showing that a breakdown of the $84,000 support would trigger a sell-off to areas below $80,000, with the March 14 low at $79,900 being the first level of interest.

📈#Bitcoin must hold 84K ‼️

Keeping it simple, no H4 close below 64K and last the day without Trump dumping on markets.#Crypto #BTC https://t.co/UPRkWfegdP pic.twitter.com/OkJDc5jXWl

— AlphaBTC (@mark_cullen) April 2, 2025

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.