Bitcoin (BTC) and other cryptocurrencies experienced a sharp decline on Monday, February 10, 2023, as escalating trade tensions between the United States and China fueled renewed selling pressure. The largest cryptocurrency dropped to as low as $91,000, while major altcoins like Ethereum (ETH) and Solana (SOL) also faced losses.
The latest round of tariffs came after the US imposed a 10% tax on all goods from China, prompting China to retaliate with its own tariffs on specific US imports, including oil and liquefied natural gas, effective February 10. This development, coupled with China's antitrust investigation into Google LLC, further intensified the tension between the two economic giants.
This market volatility erased the gains from a brief relief rally on Monday, which followed the Trump administration's decision to postpone tariffs on Mexico and Canada for a month. The initial announcement of US tariffs over the weekend had already triggered a significant drop in cryptocurrency prices.
Investor confidence in riskier assets was significantly impacted, as US investors withdrew a net $235 million from a group of 12 Bitcoin-centric exchange-traded funds (ETFs) on Monday. Open interest in Bitcoin futures contracts on the Chicago Mercantile Exchange (CME) Group Inc.'s derivatives market also decreased by 4%, indicating a more cautious stance among institutional investors.
Despite the recent price correction, Bitcoin was trading at $98,970 as of this writing, about 13% below its all-time high. Meanwhile, US ETFs investing in Ethereum saw record trading volumes on Monday, with substantial liquidation of leveraged positions driven by ongoing trade uncertainties. The iShares Ethereum Trust, managed by BlackRock, accounted for nearly half of the $1.5 billion in trading volume among a group of nine ETFs. ETH plummeted by as much as 27% on Monday, resulting in over $600 million in liquidations within perpetual futures markets, according to Bloomberg data.
Crypto analyst Ali Martinez identified $92,180 as a critical support level for Bitcoin, based on MVRV (Market Value to Realized Value) pricing bands. If this support level breaks, the next target could be $74,400. Despite the recent price correction, Bitcoin traders are still enjoying a profit margin of 3.36%. Historically, local bottoms have formed when profit margins fall below -12%, suggesting that Bitcoin could experience further downside potential before reaching a true bottom.
Furthermore, the MVRV Momentum indicator has remained in negative territory since the beginning of the year, signaling ongoing market weakness.