The on-chain options market for Bitcoin (BTC) on Derive.xyz recently indicated a concerning shift in the outlook for the cryptocurrency’s price. As of now, there is a 22% probability that BTC prices could fall to $75,000 by March 28, a significant rise from just 10% a week prior.
This surge in predicted probability coincides with escalating tensions from a renewed import tariff war involving the U.S. and its key trading partners, including Canada, Mexico, and China. Experts warn that these tariffs could exacerbate inflation within the global economy, complicating the efforts of central banks such as the Federal Reserve to institute interest rate cuts.
In an email communication, Derive pointed out, “The recent tariffs imposed by Trump, notably 25% on imports from Mexico and Canada and 10% on Chinese goods, are likely to lead to increased inflation, which could dampen investor sentiment in crypto markets.” This sentiment is echoed by Andre Dragosch, head of Europe at Bitwise, who noted on social media that the tariffs are causing waves in USD strength and constraining the global money supply.
The bearish trend for Bitcoin has already begun to manifest, with the cryptocurrency dropping 11% to around $93,700 within four days, according to CoinDesk data. Similarly, Ether (ETH), the second-largest cryptocurrency by market capitalization, fell below $2,200, marking its lowest value since August 5.
Technical analysis suggests that Bitcoin is embarking on a double top reversal pattern, which could precipitate a decline to the previously mentioned $75,000 mark. Arthur Hayes, the chief investment officer of Maelstrom and former CEO of BitMEX, has stated that he anticipates BTC will fall to approximately $75,000 before embarking on a more substantial bull run.
Despite these challenges, Derive maintains a constructive overall outlook. The firm highlights a wave of active spot ETF filings for various digital assets, including DOGE, SOL, XRP, and LTC, from significant players like Bitwise and Grayscale. An approval from the SEC could enhance the legitimacy of the cryptocurrency sector and potentially catalyze capital inflows, driving prices upward.
Furthermore, Dragosch believes that the Federal Reserve may eventually intervene to stabilize asset prices. He stated, “At some point, the Fed will need to reignite quantitative easing to prevent the dollar from rising further and to mitigate a tightening in financial conditions alongside a decelerating global growth.”
In conclusion, while the immediate outlook for Bitcoin may appear bearish amid tariff-induced inflationary pressures, emerging developments within the broader cryptocurrency landscape and potential regulatory changes could influence market dynamics significantly in the near future.
