Weakens as Trump Administration Reviews Reserve Plans

TLDR

Bitcoin currently consolidating between $90,000-$100,000, facing pressure from tightening USD liquidity conditions
Trump administration’s shift from promised strategic BTC reserve to “evaluation” phase impacted price
China announced retaliatory tariffs and export controls following US trade measures
Technical indicators show bearish RSI divergence similar to 2021 pattern
Price experiencing volatility around $100,000 level with critical support at $97,190

Bitcoin’s price movement has entered a crucial phase as multiple factors converge to challenge its recent bullish momentum. The cryptocurrency, which has been trading between $90,000 and $100,000, faces pressure from changing economic conditions and policy developments.

The U.S. Treasury General Account (TGA) has seen a notable increase in its cash balance, rising from $623 billion to $800 billion over just four weeks. This development marks a departure from previous patterns, particularly during debt ceiling issues, when the Treasury typically reduced TGA balances.

During the early 2023 debt ceiling situation, the Treasury’s decision to draw down TGA balances created additional market liquidity that supported both equity and crypto markets. The current scenario presents a different picture, with the TGA balance increasing after the U.S. reached its $36 trillion debt limit last month.

Market expert Arthur Hayes, chief investment officer at Maelstrom, highlighted these liquidity concerns on social media. The tightening of dollar liquidity typically creates challenging conditions for risk assets, including cryptocurrencies.

Adding to the market pressure, the Trump administration’s approach to its campaign promise of establishing a strategic Bitcoin reserve has shifted. Initial market excitement over this proposal helped drive Bitcoin’s price from $70,000 to over $100,000.

However, recent statements from Trump’s crypto task force indicate a more measured approach. Rather than immediate implementation, the administration announced plans to evaluate the feasibility of such a reserve. This news triggered a price decline from over $100,000 to $96,000 during overnight trading.

Jim Bianco, president and macro strategist at Bianco Research, LLC, noted the change in tone, stating that evaluation and study typically indicate reluctance rather than commitment to action in Washington.

Technical analysis reveals additional warning signs. The 14-week relative strength index (RSI) shows a bearish divergence pattern similar to the one observed during the 2021 market peak. This technical indicator suggests a potential slowdown in upward momentum.

Trade tensions between major economies have introduced another layer of complexity to Bitcoin’s market dynamics. The U.S. implementation of new tariffs on Chinese goods prompted swift retaliation from Beijing.

China’s Ministry of Finance announced plans to impose additional tariffs of 15% on coal and liquefied natural gas, along with 10% tariffs on various other goods including agricultural equipment, crude oil, and certain vehicles. These measures are set to take effect on February 10.

Back in 2018, when Trump kicked off the tariff war, the markets took a hit within weeks—S&P 500 fell 12%, ACWI dropped 12%, China slid 17%, and Bitcoin crashed 65%. pic.twitter.com/wzpclQOAvI

— merts.eth (@merts_eth) February 3, 2025

The Chinese government has also announced tighter export controls on key raw materials, citing national security concerns. These materials include molybdenum, indium, bismuth, tellurium, and tungsten.

Crypto strategist Michael van de Poppe offered his market perspective, suggesting that while volatility remains high, new all-time highs could still emerge in February if Bitcoin maintains support above $93,000.

Historical precedent raises some concerns about the impact of trade tensions. During the 2018 U.S.-China trade dispute, Bitcoin experienced a 65% price decline. This period also saw broader market effects, with the S&P 500 dropping 12% in the weeks following tariff implementation.

Current market analysis from Ali Martinez indicates that the $97,190 level represents a crucial support point for Bitcoin. The cryptocurrency’s ability to maintain this price level could determine its short-term trajectory.

Bitcoin’s recent price action shows continued volatility around the $100,000 mark. At the time of reporting, Bitcoin trades at $99,961, representing a 1% increase over the past 24 hours.

The U.S. decision to delay proposed 25% trade tariffs on Mexico and Canada by one month provided temporary relief to markets. However, this effect was short-lived as attention shifted to broader global trade tensions.

Bitcoin’s stairstep bull run pattern, which has characterized its movement since early 2023, faces its third major consolidation phase. Previous consolidation periods in mid-2024 and 2023 resulted in upward breakouts, but current market conditions present new challenges.