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Despite Bitcoin rising 2.2% on April 1, its trading price has not surpassed $89,000 since March 7. While the recent price weakness is often linked to the escalation of the U.S.-led global trade war, several factors have long been influencing investor sentiment even before President Trump announced tariffs.

Some market participants claim that strategy firms have purchased $5.25 billion worth of Bitcoin since February, which may be a key reason Bitcoin has been able to maintain above the $80,000 support level. However, regardless of who is buying, the reality is that Bitcoin had already shown limited upside potential before President Trump announced a 10% tariff on Chinese imports on January 21.

Gold/USD (left) vs Bitcoin/USD (right). Source: TradingView / Cointelegraph

The S&P 500 index reached an all-time high on February 19, exactly 30 days after the trade war began, while Bitcoin has repeatedly failed to maintain above $100,000 over the past three months. Although the trade war has clearly affected investors' risk appetite, strong evidence suggests that Bitcoin's price weakness began even before President Trump took office on January 20.

Spot Bitcoin ETF inflows, strategic Bitcoin reserve expectations, and inflation trends

Another data point that weakens the relationship between tariffs and Bitcoin prices is the spot Bitcoin exchange-traded funds (ETFs). In the three weeks following January 21, net inflows into spot Bitcoin ETFs reached $2.75 billion. By February 18, the U.S. announced plans to impose tariffs on imports from Canada and Mexico, while the EU and China retaliated. Essentially, even as the trade war escalated, institutional demand for Bitcoin remained.

Part of the disappointment among Bitcoin traders after January 21 was due to excessive expectations, particularly surrounding President Trump's mention of a "strategic national Bitcoin reserve" commitment at the Bitcoin conference in July 2024. As investors gradually lost patience, their frustration peaked with the actual executive order released on March 6.

A key factor hindering Bitcoin's ability to break through $89,000 is the trend of inflation, reflecting the relatively successful monetary policy strategies of global central banks. In February 2025, the U.S. Personal Consumption Expenditures (PCE) price index rose 2.5% year-on-year, while the Eurozone Consumer Price Index (CPI) increased by 2.2% in March.

In the second half of 2022, Bitcoin's gains were primarily driven by inflation exceeding 5%, indicating that businesses and households viewed cryptocurrency as a hedge against currency devaluation. However, if inflation remains relatively controllable in 2025, lower interest rates will favor real estate and the stock market over Bitcoin, as reduced financing costs will directly promote growth in these areas.

U.S. CPI inflation rate (left) vs U.S. 2-year Treasury yield (right). Source: TradingView

A weak job market has also suppressed traders' demand for risk assets, including Bitcoin. In February 2025, the U.S. Department of Labor reported that job vacancies were at their lowest level in nearly four years. Similarly, the U.S. 2-year Treasury yield fell to a six-month low, with investors accepting a mere 3.88% return in exchange for the safety of government-backed instruments. These data points indicate a rising preference for risk-averse choices, which is unfavorable for Bitcoin.

Ultimately, Bitcoin's price weakness stems from unrealistic expectations among investors regarding the U.S. Treasury's acquisition of Bitcoin, a decline in inflation supporting potential rate cuts, and a more cautious macroeconomic environment as investors shift towards short-term government bonds. Although the trade war has had negative effects, Bitcoin had already shown signs of weakness before the trade war began.

Related: Tariffs + Non-Farm Payrolls on the Horizon, Crypto Market Faces Challenges This Week

This article is for general informational purposes only and is not intended to provide legal or investment advice. The views, thoughts, and opinions expressed here are solely those of the author and do not necessarily reflect or represent the views and positions of Cointelegraph.

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