Bitcoin’s price has dropped below the critical $75,000 mark for the second time this week, as the escalating trade war between the United States and China intensifies. The introduction of former President Donald Trump’s controversial 104% tariff on Chinese goods has sent shockwaves through global markets, with risk assets such as equities and cryptocurrencies taking the hardest hits.
Bitcoin, down 11% this week, has been caught in the crossfire, with altcoins, especially Ethereum (ETH), suffering even more severe losses — a staggering 25% decline over the past seven days. The global crypto market has been in freefall, further exacerbated by mass liquidations totaling $390 million, according to data from Coinglass.
Tariff War Takes Toll on Risk Assets
As the US and China continue their fierce tariff war, uncertainty has reached fever pitch, sending tremors across global financial markets. Bitcoin and other digital assets are facing an existential crisis as the global economy buckles under the strain of escalating geopolitical tensions. Many analysts are predicting Bitcoin’s value could dip further, with some forecasting a potential drop below $70,000 in the coming weeks.
Peter Schiff, a vocal critic of Bitcoin and an economist known for his bearish stance on traditional markets, has weighed in on the ongoing turmoil, suggesting that if the Trump administration’s secret agenda was to crash the stock market and reduce long-term interest rates, it is already failing. Schiff noted that while stock prices are falling, bond yields have surged to their highest levels in over four years, adding more pressure to an already strained financial system.
Is a Global Recession Inevitable?
With the US stock market experiencing a sharp correction, fears of a full-blown global recession are mounting. The collapse of various asset classes, including stocks, bonds, and crypto, is fueling concerns about broader economic instability. Global economic experts are raising alarms that if the downturn continues, it could lead to an extended global recession.
Meanwhile, attention is shifting to the Federal Reserve’s response to the ongoing crisis. With market uncertainty growing, there are increasing expectations that the Fed may soon pivot and announce interest rate cuts to prevent further economic damage. Global Macro Investor and founder of Real Vision, Raoul Pal, compared the current market situation to December 2018, when the Fed signaled a similar shift. Pal suggests that the current environment presents a potential opportunity for a “trade resolution with China,” alongside a near-term rebound in markets.
Fed’s Dilemma and China’s Role in Bitcoin
BitMEX CEO Arthur Hayes has also voiced concerns about the Fed’s ability to effectively respond to the market breakdown, predicting that the situation will likely force the Fed to intervene in the coming weeks. Hayes warned that rising Treasury yields, in combination with falling stock prices, could spell further disaster for the US economy. Moreover, he speculated that as uncertainty in the global macro environment increases, Chinese investors could increasingly look to Bitcoin as a safe haven, driving demand for the cryptocurrency.
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