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EU Retaliatory Tariffs Pose Risk of Bitcoin Correction to $75,000
The cryptocurrency market has been on a wild ride lately, with prices swinging dramatically in both directions. While some analysts are predicting a big comeback for Bitcoin and other digital assets, others are sounding the alarm about a potential correction to a lower price range. One of the key factors driving this cautionary tale is the looming threat of EU retaliatory tariffs, which could have a devastating impact on global markets – and Bitcoin’s price – before the end of April.
Tariffs are a key tool used by governments to protect their domestic industries and balance their trade deficits. However, they can also have unintended consequences, such as higher prices for consumers and lower profits for businesses.
In the case of the EU, which is set to impose retaliatory tariffs on several US goods, including whiskey, denim jeans, and motorcycles, the impact could be significant. The tariffs, which are set to take effect on April 2, are expected to boost the EU’s economy by around €10 billion ($11.7 billion) over the next year, according to a report from the European Commission.
Tariffs: The Unwanted Guest at the Party
For those who may not be familiar with the term “tariff noise,” it refers to the constant backdrop of tariffs and trade tensions that have been plaguing global markets for years.
The Domino Effect
The impact of EU retaliatory tariffs on Bitcoin’s price will not be isolated to just the cryptocurrency market. Rather, it will have a ripple effect throughout the global economy, leading to a domino effect that could send prices plummeting.
For example, the US-China trade war, which began in 2018, had a significant impact on global trade and commodity prices. The conflict led to a sharp decline in agricultural exports from the US to China, which in turn benefited other countries, such as Canada and the EU, that had trade agreements with China.
The Bitcoin Correction
So, what does this mean for Bitcoin’s price? In a recent interview with Cointelegraph, a Nansen analyst warned that the tariff noise will likely continue to pressure global and cryptocurrency markets until after April 2, limiting investor risk appetite.
This prediction is supported by historical data, which shows that Bitcoin’s price is highly correlated with global stock markets and commodity prices. When the global economy is experiencing uncertainty and volatility, Bitcoin’s price tends to decline.
In the event of a correction to a lower price range, such as $75,000, Bitcoin’s price could be influenced by several factors, including:
- Increased supply: As the price of Bitcoin declines, miners and other holders of the cryptocurrency may be forced to sell their holdings to meet their expenses, leading to an increase in the supply of Bitcoin on the market.
- Decreased demand: As the price of Bitcoin declines, investors may be less likely to buy the cryptocurrency, leading to decreased demand and lower prices.
- Ripple effect: A decline in Bitcoin’s price could lead to a decline in the prices of other cryptocurrencies, such as Ethereum and other altcoins, which are often influenced by the price of Bitcoin.
A Silver Lining
While the threat of EU retaliatory tariffs is certainly a major concern for Bitcoin investors, there may be a silver lining. The tariffs may also present an opportunity for investors to buy the dip and accumulate Bitcoin at a lower price.
In the event of a correction to a lower price range, investors may be able to purchase Bitcoin at a discount, which could ultimately lead to higher returns as the market recovers. This strategy is often referred to as “buy the dip,” and it has been successful for many investors in the past.
As the market continues to navigate the choppy waters of tariffs and trade tensions, it is essential for investors to stay informed and adapt to changing market conditions. By doing so, they may be able to ride out the uncertainty and emerge stronger on the other side.
Remember, the cryptocurrency market is known for its volatility, and prices can swing dramatically in both directions. However, with a solid understanding of the market and a well-thought-out investment strategy, investors may be able to navigate even the most challenging of market conditions.
