Bitcoin is climbing toward $80K as it continues its recovery from yesterday's 5-month low of $74.4K. However, despite this upward momentum, the ongoing uncertainty surrounding Trump’s trade tariffs has left market sentiment cautious.
Yesterday’s Chaos, Today’s Calm
Yesterday’s trading was marked by volatility, with risk assets experiencing dramatic swings due to mixed signals from the White House. Today, the mood has shifted to a more stable outlook, fueled by hopes that President Trump might be open to negotiations.
A Weaker Yuan Could Benefit Bitcoin
Trump has taken a firm stance against China, threatening a further 50% tariff should Beijing retaliate, while China has vowed to continue its resistance. In response, the People’s Bank of China (PBoC) allowed the yuan to weaken past the critical 7.20 per dollar level, marking the first time since Trump took office that the currency has dropped below this threshold. This move is viewed by investors as a potential shift towards managed depreciation, which could make China’s exports more competitive and partially offset the impact of US tariffs on Chinese goods.
The slight weakening of the yuan is helping improve risk sentiment, potentially benefiting Bitcoin. This could encourage Chinese capital to flow into Bitcoin, as it did in 2015, when a similar move saw Bitcoin surge in value.
On August 11, 2015, China devalued the yuan by 1.9%, the largest single-day depreciation in over two decades. Bitcoin initially fell 20% alongside US stocks but quickly rebounded, surging 60% over the next four months. Ben Zhou, CEO of the Bybit crypto exchange, has noted that a weakening yuan typically bodes well for Bitcoin. However, it’s important to consider that Beijing has become increasingly anti-crypto in recent years, which may make it harder for investors to diversify into digital currencies.
Is Trump Ready to Negotiate?
There is growing optimism following news that US Secretary Scott Bessant is leading a team of negotiators in Japan, which suggests the Trump administration could be open to discussions. The Nikkei, which had fallen 8% yesterday, rebounded by 6% today. Other risk assets, such as US futures and European stocks, also saw positive movement.
While Bitcoin and other risk assets are seeing a bounce today, the broader outlook remains uncertain. For a sustainable recovery, Trump would need to ease some of the tariffs, or central banks would have to step in to provide economic support. While the PBoC is taking action, the Federal Reserve remains hesitant to intervene at this stage, as US jobs data remains strong and inflation is still above target.
Bitcoin Technical Analysis
Weekly Chart: Bitcoin is holding above the 50-week moving average (SMA) at $76.8K, a key level of support that, if broken, could signal a bear market.
Daily Chart: Bitcoin is trading below a falling trendline from early January. The 50 SMA is crossing below the 200 SMA, forming a "death cross" that suggests near-term weakness. Sellers will need to break through $78K and $74.4K (the 2025 low) to confirm a bearish move toward $70K.
If support around the $77K-$80K level holds, buyers will need to push past the 200 SMA at $86.7K to gain momentum toward $90K.