Bitcoin’s Momentum Indicator Flashes Bearish as Trump’s Tariff Rhetoric Clouds Market Outlook
A key momentum indicator that signaled Bitcoin’s (BTC) post-election price rally has now turned negative, coinciding with renewed tariff threats from U.S. President Donald Trump. While this shift raises concerns, it is not necessarily a reason for immediate panic.
MACD Turns Negative but Lacks Confirmation
The indicator in question is the Moving Average Convergence Divergence (MACD) histogram, which helps assess trend strength and potential reversals. It is calculated by subtracting Bitcoin’s 26-week moving average from its 12-week moving average. A nine-week average of the MACD itself serves as a signal line, and the difference between the MACD and its signal line is plotted as a histogram.
On Bitcoin’s weekly chart, the MACD has crossed below zero—a move typically interpreted as a bearish momentum shift. Historically, crossovers above zero indicate bullish momentum, while those below zero suggest a potential downturn. Notably, in mid-October, the MACD flipped positive, reinforcing a bullish outlook that contributed to projections of BTC rallying toward $100,000.
Despite this recent bearish signal, Bitcoin’s price action does not currently validate the MACD’s warning. BTC remains locked in a broader range between $90,000 and $100,000, with tighter consolidation in the $95,000–$100,000 band. This lack of clear direction reduces the immediate significance of the MACD’s bearish crossover.
It’s crucial to remember that technical indicators are derivatives of price action, not the other way around. For the MACD’s latest signal to be meaningful, it must be confirmed by price movement—just as its bullish signal in October was validated by Bitcoin’s breakout from a multi-month trading range.
Macroeconomic Risks Loom Over Bitcoin
While the MACD alone is not a cause for alarm just yet, broader macroeconomic risks could introduce volatility that tests BTC’s key support at $90,000. A break below this level would lend greater credibility to the indicator’s bearish shift.
At the forefront of these concerns is Trump’s tariff rhetoric. The former president announced plans to impose a 25% tariff on all steel and aluminum imports, with additional levies on metals to be revealed later this week. Furthermore, he has hinted at broader tariffs on goods imported from the European Union, according to a report from UBS.
The potential for escalating trade tensions is already affecting economic sentiment. The University of Michigan’s consumer sentiment survey, released on Friday, showed that inflation expectations for the next 12 months surged from 3.3% in January to 4.3% in February—the highest level since November 2023.
This inflationary pressure could delay Federal Reserve rate cuts. Market indicators, such as 2-year inflation swaps, have begun pricing in a tariff-related risk premium. At 2.72%, these swaps have hit new highs, signaling that traders expect the Fed to maintain a cautious stance.
“The market sees the Fed staying on pause for an extended period. Growth remains stable, and even if inflation falls to 2%, there’s no urgency for the Fed to cut rates,” said Alfonso Peccatiello, founder of Macro Compass, in a post on X (formerly Twitter).
Key Data Ahead: CPI Report on February 12
Investors will now turn their attention to the upcoming Consumer Price Index (CPI) report for January, scheduled for release on February 12. This data could provide further clarity on inflation trends and the Fed’s potential policy path—both of which are key drivers for risk assets like Bitcoin.
For now, while the MACD’s bearish signal adds an element of caution, Bitcoin’s price action remains the ultimate deciding factor. Until BTC breaks out of its established range, traders may view the indicator’s shift as a warning rather than a definitive trend reversal.
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