Bitcoin Plummets as US-China Trade War Sparks Market Turmoil
Bitcoin and the broader cryptocurrency market faced a sharp decline following the United States’ imposition of a record 104% tariff on Chinese goods, exacerbating global trade tensions. The unexpected move by the Trump administration has rattled investor confidence, triggering a sell-off in crypto assets. Analysts warn of further volatility as Bitcoin longs face liquidation risks amid an unwinding Treasury basis trade.
Bitcoin In Free Fall After 104% Tariff Shock on China
The United States has imposed a record tariff of 104% on Chinese products, escalating trade tensions and delivering a severe blow to global economic confidence. This sudden decision by Trump has surprised the crypto markets, leading to a rapid decline in prices, with Bitcoin at the forefront. The trade war has overflowed the market, causing financial and crypto instability.
Bitcoin Longs at Risk of Liquidation Amid Treasury Basis Trade Unwinding
The worst fears for risk assets, including cryptocurrencies, are coming true, raising the risk of Bitcoin (BTC) falling below $74,000. This potential move could lead to a shakeout of Leveraged long bets. On Sunday, CoinDesk discussed the possibility of pronounced downside volatility in risk assets due to a potential unwinding of Treasury market arbitrage bets, which catalyzed the 2020 crash. Observers note that the unwinding of so-called carry trades has begun, evident from the nearly 70 basis points rise in the U.S. 10-year Treasury yield to 4.5%. This dynamic could impact the broader crypto market, with investors closely monitoring the situation.
Tariffs Shock: Why Bitcoin Could Win the Trade War
Arthur Hayes, CIO of Maelstrom, discussed the potential implications of U.S. tariffs policy on the cryptocurrency market, particularly Bitcoin. Hayes links U.S. tariffs to potential central bank money printing, which could boost Bitcoin’s value due to its limited supply. Tariffs might weaken the USD, causing capital flight from U.S. stocks and potentially benefiting Bitcoin in the medium term. Hayes sees parallels to past events where currency devaluation and capital flight led to significant Bitcoin price increases. This week, over $100 billion was wiped out from the crypto market within 30 minutes, with BTC plunging over 8% within hours, though it managed to hold strong compared to stock markets. The crypto market remains volatile as Bitcoin recovers.
Michael Saylor’s Company May Sell Bitcoin to Pay Off Debt
Michael Saylor’s software company, Strategy, which has significant investments in Bitcoin (BTC), has warned of a potential sale of some of its Bitcoin holdings to meet financial obligations. In a regulatory filing on Apr. 7, the company disclosed that if it fails to secure timely financing, either through equity or debt, it may be forced to sell BTC. The majority of Strategy’s assets are in Bitcoin, making the cryptocurrency’s price crucial for the company’s debt-settling capacity. For Q1 2025, Strategy expects to report an unrealized loss of nearly $6 billion, despite a $1.69 billion tax benefit. The company has around $8 billion in debt and faces significant financial pressure with $35 million in annual interest payments and $150 million in yearly dividends.
Is Strategy Really Planning to Sell Its Bitcoin?
A recent rumor claimed Strategy might sell its Bitcoin holdings if prices fall, citing an 8-K form filed with the SEC on April 7. However, this sparked confusion, as the statement is part of a routine risk disclosure, not a sign of panic. Similar language has appeared in past 10-Q reports, including Q1 2024 and throughout 2023. It’s a standard precaution many public companies include, and doesn’t indicate any immediate plans to sell Bitcoin due to market drops.
