Bitcoin Indicator Pointing to $70K Breakout Turns Negative as Trump’s Trade War Escalates

Bitcoin Faces Bearish Momentum, But Tariff Fears and Economic Pressures Could Amplify Market Risks

A key momentum indicator, the moving average convergence divergence (MACD), has shifted into a bearish signal, indicating a potential downtrend for Bitcoin (BTC). This change in momentum coincides with the growing concerns about trade tensions, particularly President Donald Trump’s aggressive tariff rhetoric. While this signal could unsettle some market participants, there’s no immediate cause for panic yet.

The MACD histogram, which helps measure the strength of trends, has now dropped below zero on Bitcoin’s weekly chart. This shift reflects a change from the earlier positive MACD crossover, which had suggested a bullish trend and played a role in Bitcoin’s surge towards $100,000. The histogram tracks the difference between Bitcoin’s average price over the last 12 weeks and the previous 26 weeks, with positive readings signifying upward momentum and negative readings indicating downward pressure.

Currently, Bitcoin remains within a narrow trading range of $95,000 to $100,000. Despite the bearish MACD reading, the lack of significant price movement at this level makes the indicator’s bearish crossover less concerning. It’s important to remember that technical indicators like the MACD are derived from price actions and need to be validated by actual market movement. The previous positive MACD signal was confirmed by Bitcoin’s breakout in mid-October, which drove its price higher.

Geopolitical Tensions and Inflation Expectations Could Add to Bitcoin’s Downside Risks

While the bearish MACD reading signals caution, a few broader macroeconomic factors could add volatility to the Bitcoin market. Chief among these concerns are the geopolitical tensions arising from Trump’s tariff policies, which threaten to destabilize global markets. Trump recently announced a plan to implement 25% tariffs on steel and aluminum imports, with further tariffs on goods from the European Union potentially on the horizon.

These developments are already influencing inflation expectations, as seen in the University of Michigan’s consumer sentiment survey. Inflation forecasts for the year ahead rose to 4.3% in February, up from 3.3% in January—marking the highest level since November 2023. These rising inflation expectations could keep the Federal Reserve from quickly lowering interest rates, contributing to broader market volatility.

Alfonso Peccatiello, the author of Macro Compass, pointed out that the market is beginning to price in a long pause from the Federal Reserve, with growth holding steady. Even if inflation eventually drops to the target 2% range, the Fed is unlikely to rush into rate cuts, adding further uncertainty.

The upcoming release of the U.S. Consumer Price Index (CPI) data on February 12 could provide additional clues about inflation trends. Depending on the market’s interpretation of the report, Bitcoin’s price could experience further pressure, especially if it triggers a risk-off sentiment in the broader financial markets.

If Bitcoin’s price fails to hold above the critical $90,000 level, the bearish MACD signal could gain validity, reinforcing a negative shift in momentum. Traders will be closely monitoring these macro factors in the days ahead, as they could determine whether Bitcoin experiences a deeper correction or recovers momentum.