Bitcoin Struggles as U.S.-China Trade War Intensifies: Is the ‘Death Cross’ Inevitable?
Bitcoin’s Death Cross – Asia saw a risk-off sentiment on Thursday, as traders eagerly awaited Beijing’s reaction to the latest round of reciprocal tariffs imposed by U.S. President Donald Trump. On Wednesday, Trump announced new tariffs on imports from 180 countries, including an additional 34% tariff on Chinese goods, bringing the total tax on Chinese imports to 54%. The move is part of a broader trade strategy aimed at counteracting what Trump views as unfair trade practices by several nations, with China and the European Union identified as the primary offenders.
China’s Retaliation Could Shape Market Direction
Market observers have stressed that China’s response will play a pivotal role in determining the next steps for global markets. Robin Brooks, managing director and chief economist at the International Institute of Finance, highlighted that if China chooses to devalue the yuan in retaliation, it could trigger a global risk-off scenario, with emerging markets (EMs) bearing the initial brunt before spreading to the U.S. markets.
On Thursday, China urged the U.S. to remove tariffs and vowed immediate retaliation. As a sign of the ongoing tensions, the Chinese yuan dropped to a seven-week low of 7 RMB/USD. This depreciation is one method China could employ to counteract the tariffs by making its goods more competitive in global markets. However, such a move could also lead to volatility in currency markets and further disrupt global financial stability.
Impact on Asian Markets and Bitcoin
As anticipated, Asian equities fell, with Japan’s Nikkei hitting an eight-month low. Meanwhile, U.S. stock futures dropped over 2%, signaling a shift into a risk-off mode across the board. Bitcoin (BTC), which has gained attention as a risk asset, also saw a sharp decline, dropping from $88,000 to $82,500 following Trump’s tariff announcement. This dip occurred against the backdrop of a potential “death cross” technical pattern, with the 50-day SMA set to fall below the 200-day SMA, a bearish signal for the cryptocurrency.
As tensions between the U.S. and China continue to escalate, investors are watching closely for signs of further devaluation of the yuan or other moves by the People’s Bank of China (PBoC) that could disrupt global markets and risk assets like stocks and cryptocurrencies.
Disclaimer: This article is for informational purposes only and does not constitute investment advice. Cryptocurrencies and stocks, particularly in micro-cap companies, are subject to significant volatility and risk. Please conduct thorough research before making any investment decisions.
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