250408 - Bitcoin $BTC Market Analysis
Today we analyze the current changes in the Bitcoin market from the perspective of the China-U.S. trade war.
It is well known that Bitcoin's movements are strongly correlated with the U.S. stock market: when U.S. stocks rise, Bitcoin usually strengthens; conversely, when U.S. stocks fall, Bitcoin often struggles to remain unaffected.
As seen recently, the U.S. stock market has experienced significant declines, mainly due to the escalation of the China-U.S. trade war, causing global market turbulence.
On April 4, China announced a 34% tariff on all imported goods from the U.S. (as shown in Figure 1), which is a strong response to previous U.S. tariff measures. This move quickly triggered market panic, leading to a sharp decline in U.S. stocks, with multiple major indices falling collectively.
In recent years, Bitcoin has shown a high positive correlation with the U.S. stock market. In the context of a U.S. stock market crash, Bitcoin naturally struggles to maintain a strong market on its own, resulting in a substantial decline.
Currently, it appears that the trade war is far from over.
U.S. President Trump has openly stated that if China does not cancel the 34% tariff on the U.S. before April 8, the U.S. will further escalate on April 9, imposing new tariffs of up to 50% on Chinese goods.
This “tit for tat” situation suggests that the trade war may continue to escalate. What impact will this have on U.S. stocks and Bitcoin?
I believe the U.S. stock market is likely to enter a period of turbulent decline, especially in manufacturing and technology stocks, for three reasons:
- Decreased corporate profit expectations: Increased costs + market uncertainty put pressure on both corporate investment and profits;
- Decreased consumer confidence: Tariffs raise end-product prices, weakening the purchasing power of the American public;
- Increased market risk aversion: Investors are more inclined to sell risk assets and turn to safe havens like gold and bonds.
Given the strong correlation between the U.S. stock market and Bitcoin, it is likely that Bitcoin will also weaken due to the drag from U.S. stocks.
In summary, if the trade war between China and the U.S. continues, it will be a persistent negative for Bitcoin.
Considering Bitcoin $BTC 's current turbulent decline, it is advisable to align with the market and the situation, focusing on short-selling.
