Tariff Turbulence: Why China’s Trade War is Keeping Bitcoin Below $88K

The price of Bitcoin has been caught in a geopolitical crossfire this year, with U.S.-China trade tensions repeatedly pushing the cryptocurrency below critical resistance levels. After briefly touching $88,106 in early April, Bitcoin has since retreated to just above $87,000—a level now framed as a battleground for bulls and bears alike. At the heart of this volatility is a series of escalating tariff measures and unresolved macroeconomic risks, all tied to China’s role in the global economy.

The Trade War’s Ripple Effect on Bitcoin

The latest tariff-related stumble for Bitcoin stems from China’s refusal to back down in its trade dispute with the U.S. On April 2, 2025, the U.S. imposed a 125% retaliatory tariff on $1.5 trillion of Chinese imports, prompting Beijing to mirror the move. This tit-for-tat escalation has created a “risk-off” environment, with investors fleeing equities and even traditional safe havens like gold. Bitcoin, which many view as a macro-hedging tool, has not been immune.

The cryptocurrency’s recent dip from $87,774 to $86,800 aligns almost precisely with the timing of the latest tariff announcements. Analysts at the Kobeissi Letter note that each escalation in trade rhetoric has triggered a 2–3% drop in Bitcoin, with the $88K level acting as both a psychological ceiling and a technical resistance zone.

Why $88K Matters

Bitcoin’s struggle to break above $88K is no accident. This price point coincides with the cryptocurrency’s 50-day moving average, a critical technical indicator. Bulls argue that a sustained breakout above $88,770—the 2023 all-time high—would signal a return to its bull run. However, bears point to the 200-day moving average at $85,000 as a potential support line. A breach below this could trigger a deeper correction toward $80K, a level not seen since late 2024.

The $88K threshold also reflects broader institutional sentiment. MicroStrategy, for instance, has added 80,715 BTC to its reserves since January 2025, even with a $5.9 billion unrealized loss. This “buy-the-dip” strategy suggests confidence in Bitcoin’s long-term narrative, but it hinges on resolving the trade war’s macro risks.

The Regulatory Wildcard

Adding to Bitcoin’s uncertainty is speculation about China’s regulatory stance. Unconfirmed reports of potential Bitcoin trading legalization have sparked short-lived rallies, but analysts remain skeptical. “Policy shifts in China take time,” notes Axel Adler of CryptoQuant. “The last major change—the 2021 mining ban—took years to fully materialize.”

Meanwhile, the U.S. Federal Reserve’s inflation warnings and the 60% recession risk cited by J.P. Morgan have further clouded the outlook. Bitcoin’s correlation with tech stocks (e.g., NASDAQ) has risen, suggesting it is now treated more as a risk asset than a safe haven—a stark contrast to its 2021 role as a hedge against China’s mining crackdown.

What’s Next for Bitcoin?

The path forward for Bitcoin is a tightrope walk between geopolitical calm and chaos. Bullish scenarios, such as a U.S.-China tariff truce, could push Bitcoin toward $120K by year-end—a target cited by conservative analysts. More aggressive forecasts, like Polymarket’s $138K ceiling, assume ETF inflows and regulatory clarity.

Bear risks remain acute. A failure to hold $85K could expose Bitcoin to a drop toward $74K, its “long-term holder realized price” as per Glassnode data. Additionally, China’s threats to penalize nations negotiating with the U.S. could extend the trade war’s duration, keeping crypto markets in a state of flux.

Conclusion: Bitcoin’s Crossroads

Bitcoin’s proximity to $88K is not just a technical story but a microcosm of global macroeconomic instability. While institutional conviction and whale activity provide support, the unresolved trade war—and China’s role in it—remains the critical variable.

The data paints a clear picture:
- Bitcoin has fallen 28% from its 2024 highs, contrasting with the 53% crash after China’s 2021 mining ban.
- A sustained breakout above $88K requires either a tariff ceasefire or a fundamental shift in investor risk appetite.
- Technical indicators like the 200-day moving average and on-chain whale accumulation suggest resilience, but macro headwinds loom large.

For investors, the message is clear: Bitcoin’s next move hinges on whether the U.S. and China can find common ground—or if the trade war’s collateral damage will keep the cryptocurrency anchored near $88K for months to come. The odds favor caution until clarity emerges.