Bitcoin (BTC) witnessed a sharp decline in price after U.S. President Trump once again threatened China with massive tariffs. The news sent shockwaves across global markets, increasing volatility in both traditional and crypto markets. BTC, which was trading strongly above $122,000, dropped rapidly and is now struggling around the $118,990 level. The recent drop reflects a broader risk-off sentiment as traders react to the renewed geopolitical tension between the world’s two largest economies.
Technical Overview: BTC Breaks Below EMA50
On the 4-hour chart, Bitcoin has officially fallen below the EMA50 (Exponential Moving Average) a key short-term indicator of market strength. This breakdown signals that bearish momentum is gaining control, and buyers are losing grip in the short term.
The next major level to watch is $116,900, where the EMA200 (Exponential Moving Average) lies Support. This zone is considered a critical support area because it often acts as a turning point for BTC’s medium-term trend. If buyers defend this level successfully, a short-term rebound could occur. However, if Bitcoin fails to hold above $116,900, the door could open for a deeper correction toward the $109,000 support zone.
RSI Analysis: Still Room for Further Downside
The Relative Strength Index (RSI), a key momentum indicator, is currently moving in a negative direction. While the RSI is approaching the oversold region, it hasn’t yet entered it completely. This suggests that there’s still room for additional downside movement before Bitcoin becomes technically oversold.
Historically, BTC tends to bounce once RSI enters deep oversold levels, but until then, traders should expect continued selling pressure. The market sentiment remains fragile, and without a clear catalyst for recovery, bulls might struggle to regain control in the immediate term.
MACD Indicator: Bears Still in Command
Looking at the Moving Average Convergence Divergence (MACD), the trend remains decisively bearish. The MACD line is well below the signal line, and there’s no visible sign of a crossover that would indicate a potential bullish reversal.
This reinforces the idea that the market’s current trajectory is still negative. Momentum indicators across multiple timeframes are aligning in favor of the bears, suggesting that Bitcoin could continue its downward movement until it reaches a strong support zone or a major shift in market sentiment occurs.
Fundamental Factors: Geopolitical Tensions Impacting Crypto
The recent sell-off isn’t just technical, it’s also being driven by global headlines. President Trump’s renewed threats to impose massive tariffs on China have reignited fears of a potential trade war. This kind of political tension tends to push investors toward safer assets like gold or stablecoins, reducing appetite for riskier assets like Bitcoin in the short term.
Historically, Bitcoin has behaved both as a risk asset and a hedge, depending on the market environment. In this case, the market appears to be treating it more like a risk asset, with traders choosing to de-risk their portfolios amid global uncertainty.
Key Levels to Watch
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Immediate Resistance: $120,500 and $122,000
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Immediate Support: $118,000
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Major Support: $116,900 (EMA200)
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Critical Support Zone: $109,000
If Bitcoin manages to stay above $116,900 and regain momentum, it could attempt to reclaim $120,000 and eventually retest $122,000. However, if the bears push below $116,900, we could see a sharp decline toward $109,000 in the coming sessions.
Conclusion
Bitcoin’s recent drop highlights how sensitive the crypto market remains to global political developments. With BTC trading below its key moving averages and momentum indicators showing bearish strength, traders should proceed with caution.
All eyes are now on the $116,900 support level, where the EMA200 sits. A rebound from this area could offer short-term recovery opportunities, but a breakdown below it might invite another wave of sell pressure, potentially testing $109,000.
Until clear bullish signals appear, the short-term outlook for Bitcoin remains cautiously bearish.
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