Bitcoin (BTC) recently touched a high of $88,700 but subsequently saw a correction, landing just below $87,000 on March 27. This recent price action prompts critical questions about the potential for further declines in the near future.
The recent rejection from the $88,000 resistance level raises concerns about whether BTC price could drop further over the coming days.
BTC/USD four-hour chart. Source: Cointelegraph/TradingView
Could Tariffs Push Bitcoin Prices Lower?
On March 26, President Trump announced a significant 25% tariff on all cars and light trucks imported into the United States, set to take effect on April 3. This announcement has sparked concerns that it might trigger another sell-off in cryptocurrencies, subsequently pushing prices lower.
Key takeaways include:
- The tariff targets major trading partners, including Mexico, Canada, Japan, and Germany.
- While this is positioned as beneficial for the American automotive industry, the immediate shock could unsettle global markets.
- Previous tariffs imposed in early March resulted in Bitcoin plummeting from $105,000 to $92,000 within a day before showing signs of recovery.
- These new auto tariffs could intensify the impact, particularly as markets brace for retaliatory actions from affected nations.
Trading firm QCP Capital has commented on the current state of risk assets, noting that Trump’s tariffs might escalate trade tensions. They state, “Any further retaliation from these target economies risks injecting a fresh wave of uncertainty into an already volatile global trade landscape.”
Despite headline-grabbing catalysts such as GME’s recent capital raise for potential Bitcoin purchases, demand sentiment remains subdued. A positive factor noted is the steady inflow into spot BTC ETFs, which has totaled nearly $944.9 million since March 11. This trend reflects a bifurcated conviction among institutional investors.
Low Demand Could Lead to Further Declines
Research from Glassnode highlights that Bitcoin’s demand is relatively low, suggesting a decline in risk appetite among potential investors. Furthermore, this week’s on-chain report indicates a contraction in demand measured by realized profit and loss volumes.
In detail:
- Glassnode’s report shows a steep decline in Bitcoin’s realized profit and loss volumes, dropping from $3.4 billion to $508 million since the all-time high above $109,000.
- The current metrics mirror demand levels seen during the 2024 accumulation zone between $50,000 and $70,000.
- Healthy bull markets are characterized by increasing inflows from new investors, which are now stagnating.
Glassnode concludes that while short-term holders are dominating losses, long-term holders are beginning to accumulate, which may be a precursor to potential recovery. However, the report cautions that a significant volume of profit-taking is currently acting as resistance to any upward movement.
Key Bitcoin Levels to Watch
Traders are currently monitoring critical areas around the $88,000 level, particularly:
- Bitcoin’s immediate downside levels include the 200-day simple moving average (SMA) at $85,500 and critical support around $82,700.
- A major area of interest lies between two range lows: $81,138 (from March 18) and $76,600 (from March 11).
- If Bitcoin’s support at $82,000 falters, it could target liquidity clusters between $72,200 and $74,500.
Analysts suggest that overcoming the resistance zone between $88,700 and $92,000 would signal the end of the current downtrend, potentially setting the stage for a resurgence towards $100,000.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research before making a decision.
