Bitcoin’s Rare $71K Target: Can Liquidity Save BTC Amid US Tariff Slump?
Is Bitcoin staring down the barrel of another bear market? New US trade tariffs are casting a shadow over the business outlook, triggering concerns reminiscent of the 2022 crypto crash. But could a surge in liquidity be the rare lifeline Bitcoin desperately needs? Let’s dive into the latest market analysis and explore what experts are predicting for BTC’s price trajectory amidst this economic turbulence.
Bitcoin’s $71K Price Target Amidst Economic Headwinds
Despite recent hopes for a continued bull run, Bitcoin (BTC) finds itself navigating choppy waters. The introduction of new trade tariffs by the US has unexpectedly dampened the business outlook, creating an environment of uncertainty that’s spooking markets. This situation, according to analysts, mirrors the conditions that preceded the significant bear market bottom in 2022.
Charles Edwards, founder of Capriole Investments, highlights the severity of the situation, pointing to the Philadelphia Fed Business Outlook Survey (BOS). This survey, a key indicator of US business expectations, is flashing warning signs. Edwards notes that current readings are comparable to periods of significant economic stress: 2000, 2008, and 2022. These periods were marked by:
- Dot-com bubble burst (2000)
- Global Financial Crisis (2008)
- Crypto Bear Market Bottom (2022)
The chart below illustrates the concerning trend:
Philadelphia Fed Business Outlook Survey vs. S&P 500.
Source: Charles Edwards/X
While Edwards acknowledges that the BOS isn’t a perfect predictor, he emphasizes that such readings at historically high-risk junctures should not be ignored. The potential for escalating tariffs and declining corporate margins further intensifies these concerns.
US Business Outlook Slumps: A Bitcoin Barometer?
The impact of these tariffs on the US business outlook is undeniable. When President Trump announced reciprocal trade tariffs on April 2nd, Bitcoin reacted sharply, dropping 8.5%. Interestingly, the S&P 500 showed resilience, ending the trading day with a slight gain. This divergence suggests that the crypto market is particularly sensitive to shifts in traditional economic sentiment, perhaps even more so than established stock indices in certain scenarios.
Edwards’ analysis reveals that US business expectations are currently at levels only seen three times since 2000. This rare alignment with previous economic downturns underscores the potential seriousness of the current situation. Is this a false alarm, or a genuine signal of deeper economic challenges ahead? The market’s reaction, particularly Bitcoin’s, suggests caution is warranted.
Can Liquidity Influx Save Bitcoin?
Amidst the gloom, a potential silver lining emerges: liquidity. As Crypto News Insights has reported, an increase in global liquidity could provide a much-needed boost to crypto and other risk assets. The question is, where will this liquidity come from, and when will it arrive?
In the US, the Federal Reserve is already showing signs of easing its tight monetary policy. Speculation is growing about a return to quantitative easing (QE), a move that would inject significant liquidity into the market. Analyst Colin Talks Crypto points to the M2 money supply, which is expected to see a substantial “influx.” Historically, M2 money supply increases have been correlated with significant Bitcoin price rallies.
US M2 money supply vs BTC/USD chart.
Source: Colin Talks Crypto/X
Colin Talks Crypto suggests this M2 influx could trigger a Bitcoin price rebound as early as May. The timing remains uncertain, but the underlying principle is clear: increased liquidity often fuels asset appreciation, and Bitcoin is no exception.
Navigating the Tariff Terrain: Key Bitcoin Levels to Watch
For Bitcoin, the immediate future hinges on navigating the fallout from these trade tariffs. Capriole Investments highlights a critical level to watch: $91,000. A daily close above this mark would signal a strong bullish recovery. However, failure to reclaim this level could lead to further downside, with a potential dip towards the $71,000 zone. Interestingly, even a drop to $71,000 is anticipated to trigger a “sizable bounce,” suggesting strong support around that price point.
The ultimate direction of Bitcoin’s price, according to Capriole, will be determined by US macroeconomic movements. In essence, Bitcoin’s fate is intertwined with broader economic trends and the Federal Reserve’s policy decisions.
BTC/USD 1-day chart (screenshot).
Source: Capriole Investments
The Bottom Line: Patience and Vigilance in a Volatile Market
The current market landscape presents a complex picture for Bitcoin. Tariffs are creating headwinds, impacting the US business outlook and introducing significant uncertainty. However, the potential for increased liquidity offers a glimmer of hope. The $71,000 price target, while seemingly bearish in the short term, could represent a strategic buying opportunity if liquidity conditions improve as anticipated.
Investors should remain vigilant, closely monitoring macroeconomic developments, particularly Federal Reserve actions and M2 money supply trends. While the road ahead may be bumpy, the historical correlation between liquidity influxes and Bitcoin price surges suggests that patience and a long-term perspective may be key to navigating this volatile market.
Disclaimer: This article is for informational purposes only and does not constitute investment advice. Cryptocurrency investments are inherently risky, and readers should conduct thorough research and consult with a financial advisor before making any investment decisions.
