Heavy Trump tariffs on Canada, Mexico, and China shocked markets. Bitcoin (BTC) crashed to nearly $91,000, and the altcoins were smashed. Is the dump over, or is there more to come when the US stock market opens later on Monday?
A devastating crypto crash caused by Trump tariffs
With a trade war now looking likely to begin, it is no small wonder that Bitcoin, and the crypto sector as a whole, suffered such a devastating crash over the weekend and into Monday.
Trump’s start to his second term as President of the United States has begun in sensational fashion. After reversing huge swathes of Biden-inspired policies with hundreds of executive orders in the first few days of government, President Trump has gone ahead with his threats to levy massive 25% tariffs across the board on Canada and Mexico, the United States’ nearest trading partners, and has also imposed 10% tariffs on China.
Trad markets open soon – more downside for crypto?
The traditional stock market was down on Friday, probably in anticipation of the tariffs, but given that the tariffs were not announced until Saturday, the full impact is still to come.
With Markets opening shortly, it is to be wondered just how bad they will be affected. Bitcoin and crypto have borne the brunt of the bad news up to now, as institutions and traders will have taken advantage of the fact that crypto trades 24/7, including at weekends, in order to sell what they can.
It might be imagined that the heavy dip experienced by the crypto market will have been enough. However, when the trad market does open, and a severe run to the downside does take place, the Bitcoin crash may not have seen its full extent.
Good recovery for Bitcoin – but not out of the woods yet
Source: TradingView
The 8-hour time frame shows the extent of the Bitcoin crash. It can also be seen just how important the structure of the ascending trendline has become. This stretches all the way back to the 2021 bull market, where it perfectly caps the double tops.
After coming all the way down to retest this trendline, the price was then bought up heavily, but was unable to get back above the descending trendline of the wedge pattern. Instead, this may have been a retest of this trendline, confirming it as resistance once again.
Therefore, when the traditional market opens, the price may be drawn back down to the major ascending trendline again. If it then loses this and confirms beneath, watch out below, as a descent to $73,000 could be on the cards.
Bearish M pattern could take price back to $73,000
Source: TradingView
The view on the weekly time frame shows the entirety of the ascending trendline. While trend lines would usually play second fiddle to horizontal support and resistance levels, this particular one looks as though it will have a major say in this bull market.
That said, the candle bodies above the ascending trendline are currently forming a rather bearish M pattern. If this plays out, the resulting measured move would take the price all the way down to $73,300, which as already mentioned, would be the top point of the bull flag.
If one also looks at the Stochastic RSI at the bottom of the chart, there is potentially still some downside price momentum to come. Looking on the bright side, if the $BTC price did come back to the $73,000 level, there would probably be a lot of traders waiting greedily to fill their bags.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
