Bitcoin retreated to just above $107,000, partly due to tensions between the US and China. This market decline suggests that investors are increasingly risk-averse in the face of uncertain macroeconomic developments and rising tensions between the US and China. Investors are particularly excited ahead of US President Donald Trump's meeting with Chinese President Xi Jinping later this month. Data suggests that crypto investors have begun to reduce their positions.
According to market data, Bitcoin price has fallen 2.44 percent in the last 24 hours, falling to $107,830. The largest cryptocurrency by market capitalization has seen a 3.7 percent weekly loss. After a brief recovery at the beginning of the week, BTC has tested the $111,200 level, and is experiencing renewed selling pressure. Some analysts predict this volatility will continue in the short term. For example, according to BTSE COO Jeff Mei, "macro concerns are currently driving the market's daily movements." According to Mei, volatility will continue as trade tensions between the US and China continue.
Mei emphasized that the main reason for the decline was investors reducing their positions ahead of the Trump-Xi meeting. The meeting is expected to take place in South Korea at the end of the month. “The possibility of an agreement at the end of the month could temporarily calm the markets, but it is unlikely that the tension will completely disappear,” he added. He also stated, “The biggest risk for crypto markets today is the unpredictability of macro developments. Even a single tweet can move prices up or down. The most logical thing investors can do is diversify their portfolios and hedge against uncertainty.”
What's the latest on the crypto market?
These macro pressures affected not only Bitcoin but also leading altcoins. Ethereum fell 4.77 percent to $3,855, while BNB traded at a 5.36 percent loss. Solana also fell 4.6 percent. Outflows from spot crypto ETFs also continued. According to market data, there were net outflows of $40.5 million from spot Bitcoin ETFs and $145.7 million from spot Ethereum ETFs. Last week, BTC ETFs had their worst weekly outflow of recent times, with a net outflow of $1.23 billion.
The weak performance of both individual and institutional investors indicates a deterioration in market sentiment. The Fear and Greed Index is currently at 29, in "fear" territory. Meanwhile, investors are focusing on the US Consumer Price Index (CPI) data, which will be released this week. This data is critical for understanding the inflation trend. The market believes that if the data is weak, the probability of a 25 basis point interest rate cut by the US Federal Reserve (Fed) this month increases. According to CME Group's FedWatch tool, this probability is priced in at 98.9%.
Will trade tensions spill over into geopolitical areas?
There's talk that the tensions in US-China relations may not be limited to trade but could spill over into geopolitical areas like the South China Sea and Taiwan. The Trump administration has issued stern warnings against China's imposition of sanctions on companies investing in US-based strategic industries. China's recent restrictions on the US branches of South Korea's Hanwha Ocean have ignited a new economic conflict between the two countries centered on maritime and defense industries.
