TLDR:
- Bitcoin trades around $85,000 as markets await Trump’s “Liberation Day” tariffs
- Short-term price momentum could break either way with a 50-50 split in trader sentiment
- $9.41 billion in short positions risk liquidation if Bitcoin reaches $90,000
- Bitcoin’s recent weakness started before tariff announcements, contrary to popular belief
- Long-term outlook remains positive despite current uncertainty
Bitcoin’s price hovers near $85,000 as financial markets anxiously await President Donald Trump’s “Liberation Day” tariffs, scheduled to roll out April 3rd and 4th. The cryptocurrency has been trading in a narrow range, showing gains of about 2.6% over the past 24 hours according to recent data.
The uncertainty surrounding these tariffs has kept Bitcoin and other risk assets in limbo. Nic Puckrin, crypto analyst and founder of The Coin Bureau, notes that Bitcoin recently closed its CME gap that opened over the weekend around the $83,000 to $84,000 level.
Bitcoin is currently trading below its 200-day average. At the same time, 24-hour liquidations remain low at under $250 million, suggesting downward momentum might continue in the short term.
“Until there is more clarity around tariffs, this rangebound pattern will continue,” Puckrin explained. He believes that if tariff news is softer than expected, we could see a breakout from the current trading pattern.
If a breakout occurs, Puckrin expects $88,000 will be the short-term price level to watch. However, he cautions that increased trading volume would be needed to extend any rally.
Short Sellers at Risk
A key factor in Bitcoin’s current price action is the massive amount of short positions that could face liquidation. Market data shows that $9.41 billion worth of short positions could be wiped out if Bitcoin reaches the $90,000 mark.
A significant buildup of short positions between $80,000 and $90,000 creates the potential for a short squeeze if Bitcoin continues its upward momentum. This could trigger even higher prices as traders who bet against Bitcoin would be forced to cover their losses.
Just a week ago, Bitcoin’s surge to $87,000 wiped out $77 million in short positions. The $90,000 level now represents a psychological barrier and potential trigger point for a much larger liquidation event.
If Bitcoin reaches this level, the resulting forced buybacks from short sellers could accelerate Bitcoin’s price momentum even further.
Factors Beyond Tariffs
While many traders blame the US-led tariff war for Bitcoin’s recent price weakness, several other factors have been weighing on investor sentiment since before the tariffs were announced.
Bitcoin had already shown limited upside before President Trump announced the 10% Chinese import tariffs on January 21. The cryptocurrency had repeatedly failed to break above $100,000 in the months prior.
Institutional demand for Bitcoin remained strong even as trade tensions escalated. Spot Bitcoin ETFs saw $2.75 billion in net inflows during the three weeks following the initial tariff announcement.
Part of traders’ disappointment stems from excessive expectations around Trump’s campaign promise of a “strategic national Bitcoin stockpile,” which created unrealistic market expectations.
Another factor is the current inflationary trend. With inflation relatively under control in early 2025, lower interest rates may favor real estate and stock markets more directly than Bitcoin.
The weakening job market has also dampened demand for risk-on assets like Bitcoin. In February, the US Labor Department reported job openings near a four-year low, suggesting increasing risk aversion among investors.
Price Outlook Remains Mixed
In the short term, Bitcoin’s price direction could go either way. Puckrin notes that the Bitcoin long-short ratio is currently close to 50-50, showing just how uncertain the current market backdrop is.
A tariff shock could prompt a Bitcoin breakdown near $79,000 in the short term, or potentially lower to the next support level at $73,000 if extreme fear grips the market.
In more positive news, the low trading volume over the last few weeks and the crypto Fear & Greed Index hovering around fear could indicate that the market is at or very close to a low.
James Butterfill, head of research at CoinShares, believes that while tariffs would initially be negative for Bitcoin, the long-term picture is more positive.
“At some point, the market will realize that the U.S. can’t keep raising interest rates while the economy weakens,” Butterfill wrote. “When that happens, bitcoin will likely rebound, while stocks continue to struggle.”
