Bitcoin (BTC) Volatility Spikes as Traders Get Liquidated Post-Trump Tariffs Announcement

When the Trump tariffs began to be announced on Wednesday, Bitcoin shot up to just over $88,600. However, as it became clear that the tariffs were a lot more onerous than the market was expecting, the ensuing 7% dump caused a cascade of liquidations among traders as more than $6,000 was wiped off of the Bitcoin price in the space of around 4 hours.

Market did not anticipate the full extent of tariffs

The Wall Street Journal published a report before President Trump’s announcement on reciprocal tariffs that a 10% baseline tariff would be imposed upon all countries. It did mention that some countries would pay higher tariffs, but according to the Kobeissi Letter on X, it seems that the market was taking it that 10% would generally be levied across the board.

Long and short traders liquidated

According to Coinglass, both long and short traders were liquidated for a total of $487 million for the 24 hour period. In traditional markets, given the lateness of the announcement, the S&P 500 and the Nasdaq were able to close up on the day. However, the Nasdaq mini futures fell 6% from top to bottom, wiping off $1,200 before recovering slightly.

S&P 500 bounce or further fall?

Source: TradingView

So where does this leave the market going forward? While U.S. stocks may well open significantly down, the weekly chart does suggest that a bounce is still due. If the market decides to vehemently follow a bearish course, there is the possibility of a fall in the S&P 500 down to the low $5,000 region. That said, the Stochastic RSI at the bottom of the chart is showing a cross-up of the indicators, and this has heralded all the previous rallies.

Trump walks a tightrope

It could also be that the market may take a while to thoroughly absorb and price in all the tariffs. In fact, on the face of it, the tariffs are incredibly bearish and there is not much that can be said to detract from this. The U.S. economy is probably going to really struggle for a period, and it could be that President Trump, and his counterparts from other countries, will have to thrash out deals fairly quickly in order to limit the damage. 

President Trump is walking a tightrope. Key for his administration is to weaken the dollar, and get the 10-year bond yield further down so that refinancing the debt can be done at a much better rate of interest. Nevertheless, as this takes place, the economy could be in danger of going into freefall.

$BTC fails to make a local higher high

Source: TradingView

The $BTC price is up around 1.3% on Thursday so far, although looking at the 4-hour chart it can be seen that a resistance level has been reached. Wednesday’s Trump tariffs announcement comes within the recent long red candle that stands out from any of those from the last few days. The bulls had their impetus to break through the horizontal resistance and the descending trendline, only for the price to plummet back down again as the full extent of the tariffs became known.

What’s more, the upward spike stopped just short of making a local higher high, so it seems that the sideways and potentially downwards choppiness could be about to resume.

Bulls are running out of time

Source: TradingView

The weekly chart for $BTC could still be seen as bullish, given that a candle open above the descending trendline could be the beginning of a trend change. However, the bulls are beginning to run out of time. The descending trendline is running down to converge with the support at $80,000, and there can only be one more week before the price has to either break out or break down. If the Stochastic RSI indicator lines roll over, the breakdown, perhaps all the way down to $70,000 would be the favoured option.

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.