TLDR
Bitcoin price hovering around $85,000 amid uncertainty over upcoming Trump tariffs
Short sellers risk $9.41 billion in liquidations if Bitcoin reaches $90,000
Crypto analysts divided on price direction with some predicting a drop to $73,000
Trade war impact on Bitcoin may be overstated compared to other market factors
Institutional demand via spot ETFs has continued despite tariff concerns
Bitcoin prices remain in a state of flux as markets await President Donald Trump’s upcoming “Liberation Day” tariffs, scheduled to roll out this Wednesday and Thursday. Currently trading around $85,000, the leading cryptocurrency faces a critical juncture that could determine its short-term price direction.
Traders are watching closely as $9.41 billion in short positions could face liquidation if Bitcoin reaches the $90,000 mark. This potential short squeeze might trigger even higher prices if the market continues moving upward.
“As Liberation Day approaches, the uncertainty around the magnitude of the tariffs is keeping bitcoin and other risk assets in limbo,” wrote Nic Puckrin, crypto analyst and founder of The Coin Bureau. Puckrin noted that Bitcoin has recently closed its most recent CME gap that opened over the weekend around the $83,000 to $84,000 level.
The cryptocurrency is now trading below its 200-day average, while 24-hour liquidations remain low at under $250 million. This indicates momentum could again be on the downside, according to market watchers.
Tariff Impact on Crypto Markets
The relationship between tariffs and Bitcoin presents a complex picture. James Butterfill, head of research at CoinShares, wrote in a February note that tariffs would likely be negative for Bitcoin in the short term.
“Unlike gold, bitcoin has a growth component, meaning it reacts to economic trends and liquidity cycles,” Butterfill explained. Initially, tariffs could slow economic growth, reducing demand for risk assets like Bitcoin.
Inflation would also increase, leading to speculation on higher interest rates. Tariffs could cause a temporary price drop, as crypto often correlates with stock markets.
However, some analysts believe the trade war’s impact on Bitcoin’s price may be overstated. Despite Bitcoin’s recent struggles to break above $89,000, several other factors had already been weighing on investor sentiment long before the tariff announcements.
Price Predictions and Market Indicators
Market sentiment remains divided. According to Puckrin, the Bitcoin long-short ratio is currently close to 50-50. “We really could go either way right now, showing just how uncertain the current macro backdrop is,” he said.
If tariff news is milder than expected, Puckrin anticipates a potential breakout with $88,000 as the short-term price to watch. However, a tariff shock could prompt a Bitcoin breakdown near $79,000 in the short term, or even lower to the next support level at $73,000 if extreme fear grips the market.
On the positive side, there has been low trading volume over the last few weeks. The crypto Fear & Greed Index is still hovering around fear, which Puckrin said could indicate that the market is at or very close to a low.
“In the longer term, we can be fairly confident that BTC will rally from here — the question is only around timing,” he added.
Long-term Outlook
Some market experts anticipate a potential market shakeout soon. Crypto analyst ‘Crypto Fella’ shared a price chart suggesting a possible drop in Bitcoin price to between $78,692 and $70,000, followed by a push toward a $94,655 target.
$BTC – #Bitcoin: Shake-out before the break-out. Would you survive this? pic.twitter.com/t3Fy2Qel2E
— Crypto Fella (@CryptoFellaTx) March 31, 2025
10X Research released a similar note earlier in March, warning of a potential drop to $73,000. The firm noted that retail traders loaded up on memecoins during Bitcoin’s postelection rally to record highs in January.
However, that was likely a market top that began to crumble, with many portfolios holding falling meme coins. 10X said that Bitcoin would need a refreshed narrative to power the next major upward swing.
Despite the uncertainty, institutional demand has remained strong. Spot Bitcoin exchange-traded funds (ETFs) saw $2.75 billion in net inflows during the three weeks following January 21, even as the trade war escalated.
Some analysts point to broader market factors affecting Bitcoin’s performance. The weakening job market dampens traders’ demand for risk-on assets, including Bitcoin. In February, the US Labor Department reported job openings near a four-year low.
Similarly, yields on the US 2-year Treasury fell to a six-month low, with investors accepting a modest 3.88% return for the safety of government-backed instruments. This data suggests rising risk aversion, which is unfavorable for Bitcoin.
As of Tuesday, Bitcoin traded near $85,000, up 2.6% over the past 24 hours, according to CoinMarketCap data. Ethereum climbed near $1,900, up 4.2% during that period, while the iShares Bitcoin Trust (IBIT) and other spot bitcoin ETFs rose 3%.
