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Bitcoin Correction Could Be Just Beginning
January was a record-breaking month for Bitcoin, with the leading cryptocurrency surging to an all-time high of nearly $110,000 just before Donald Trump’s inauguration. Despite heightened volatility in the following days, BTC still closed the month above $104,000, fueling optimism for an even stronger February.
Historically, February has been a bullish month for Bitcoin, with just two of the past 12 years ending in the red. Additionally, past post-halving years have typically seen double-digit gains, leading many analysts to anticipate further upside.
However, Bitcoin stumbled out of the gate in February, plunging from around $102,000 to a local low below $92,000 in just three days. Bulls have since stepped in, pushing the price back to $95,000, according to CoinGecko data.
Trump’s Tariffs Spark Market Turmoil
One of the key drivers behind this sudden pullback is macroeconomic uncertainty triggered by President Trump’s newly announced tariffs. His decision to impose steep tariffs on China, Canada, and Mexico has rattled global financial markets, with cryptocurrencies taking a particularly hard hit.
Crypto analyst Momin noted the impact of the trade war on digital assets, warning that if Trump’s policies continue to shake investor confidence, Bitcoin could dip to $80,000.
“You don’t need to deploy all your money here, let the situation unfold. Stay safe,” he cautioned.
Market analyst Ali Martinez also weighed in, pointing to $92,180 as a critical support level based on the MVRV Pricing Bands. A breakdown below this mark, he warned, could trigger a sharp decline to as low as $74,400.
Could Bitcoin Benefit in the Long Run?
While the tariff war has sparked short-term pain for both traditional and crypto markets, Jeff Park, Head of Strategy at Bitwise, believes it could ultimately be bullish for Bitcoin.
Park suggests that the long-term impact of Trump’s policies should be analyzed through two economic concepts: the Triffin dilemma and Trump’s economic strategy.
The Triffin dilemma describes the paradox where a national currency, like the U.S. dollar, serves as the global reserve currency. While this status offers financial advantages, it also requires the U.S. to maintain trade deficits to supply global liquidity.
According to Park, Trump’s tariffs are a strategic move to push foreign nations to reduce their reliance on the U.S. dollar and shift investments away from American debt. The ultimate goal, he argues, is a controlled devaluation of the dollar, lower bond yields, and reduced dependence on foreign capital.
If this plays out, Bitcoin could become an increasingly attractive hedge against inflation and currency devaluation.
“As the world enters a sustained tariff war, demand for Bitcoin will skyrocket,” Park predicts. “Both U.S. investors and international market participants will turn to Bitcoin for different reasons, but the outcome will be the same—higher prices, and at an accelerated pace.”
Source: Cryptopotato
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