Bitcoin remains bearish on increased risk aversion

Bitcoin price remained bearish on Wednesday, dropping below $97,000 as a risk aversion sentiment prevailed. If BTC price declines, support can be found at $90,000, while resistance may be encountered at $106,970. 

Ethereum price traded sideways on Wednesday, moving close to the $2,760 level with low volatility. If Ethereum's price declines, it may encounter support near $2,000, while if it increases, resistance may be encountered near $3,520.

Bitcoin price registered a new all-time high of $109,880 early last week but dipped later and has been under pressure by increased risk aversion sentiment. Most major cryptocurrencies faced selling pressure over the weekend, as US President Donald Trump’s trade policies may start global trading wars. 

The uncertainty over Trump’s future policies and trade tariffs is generating a risk aversion sentiment, putting pressure on crypto markets. Trump has been using threats of imposing trade tariffs as a negotiation tool to further his agenda with other countries. 

Trump has threatened BRICS countries with massive tariffs of up to 100% if they try to replace the dollar with any other currency or if they create a new currency for international trade. On Saturday, Trump announced that he would impose 25% tariffs on Canadian and Mexican goods, except Canadian energy exports, which will be subject to a 10% tariff. 

On Monday, Trump posted a new list of threats and grievances on his social media concerning Canada, China, and several other countries. Trump’s comments triggered a risk aversion sentiment putting pressure on cryptocurrencies over the weekend and early on Monday. Later on Monday, however, Trump took back some of his tariff threats, demonstrating that they are used to intimidate other countries into submission. Trump stated that he would postpone imposing tariffs on Canada and Mexico for a month, still holding the tariffs as a threat against them. Stock markets recovered after Trump withdrew the tariffs and risk assets rallied late on Monday. 

On Tuesday, Trump stated that he is determined to impose a 10% duty on imports from China to the US. China, however, is retaliating in kind, imposing tariffs on US imports to China. The Chinese finance ministry said that it would impose levies of 15% on coal and Natural Gas and 10% on crude oil and other commodities.

Trump’s proposed plans for building a Bitcoin strategic reserve have been boosting Bitcoin price. Donald Trump has openly declared his support of crypto markets, announcing that he will make the US ‘the crypto capital of the planet’. Growing expectations that the new government will adopt a pro-crypto regulatory and fiscal policy are boosting crypto markets and Bitcoin price registered a new all-time high of $109,880 in January. 

Cryptocurrency prices are also affected by central banks’ interest rates. The US Federal Reserve held interest rates steady at its January meeting, after delivering three consecutive rate cuts in 2024. FOMC policymakers voted unanimously to maintain the federal funds range to a target range of 4.25% to 4.50%, which was in line with expectations. 

Fed Chair Jerome Powell delivered a mildly hawkish message after the policy meeting. Powell stated that the Fed’s approach will remain data-driven and stressed that the central bank needs to consider potential policy changes under Trump’s administration. Market odds of another rate cut before summer dropped after Powell’s speech, with markets pricing in a rate cut in June at the earliest.

BTC/USD 1h Chart

ETH/USD 1h Chart

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Written by:
Myrsini Giannouli

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