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Bitcoin Rallies as Liberation Day Tariffs Loom
XRP’s gains came alongside a bitcoin (BTC) rally, driven by a rebound in global equities ahead of President Trump’s tariff announcements on April 2, dubbed Liberation Day. Notably, the Nasdaq Composite Index gained 0.87%, while the DAX Index rallied 1.70%, a significant gain considering the potential impact of auto tariffs on German carmakers. The risk-on session left gold down 0.31%, snapping a three-day winning streak.
President Trump is expected to announce tariffs on April 2 at 1600 Eastern Time and will officially become effective on April 3. The White House reportedly downplayed market concerns, stating that Trump takes ‘swings in the market seriously.’
The Kobeissi letter remarked:
“Just 3 weeks ago, President Trump said he was not watching the stock market. Tomorrow is a big day.”
If market performance weighs on the President’s decisions, he could delay or scale back tariffs, potentially boosting risk asset demand, including BTC. Since Trump’s initial tariff threats, BTC has fallen 20% from a January 31 high of $105,993 (see main chart).
Institutional Investors Dislike Uncertainty
Despite BTC’s rally, institutional investors remained cautious as Trump’s tariff announcements loomed. The US BTC-spot ETF market looked set to record a three-day outflow streak on April 1. According to Farside Investors:
- Fidelity Wise Origin Bitcoin Fund (FBTC) had net outflows of $85.4 million.
- ARK 21Shares Bitcoin ETF (ARKB) saw net outflows of $87.4 million.
- Grayscale Bitcoin Trust (GBTC) reported net outflows of $10.01 million.
- However, Bitwise Bitcoin ETF (BITB) saw net inflows of $24.5 million.
Excluding flows from BlackRock’s (BLK) iShares Bitcoin Trust (IBIT), net outflows reached $157.8 million on April 1, following $60.6 million in outflows on March 31.
Bitcoin Price Outlook: Key Scenarios
April 1, BTC rallied 3.20%, following a 0.13% gain on Monday, closing at $85,150, its highest in five sessions. However, risks remain.
Potential scenarios:
- Bearish Scenario: An escalation in the trade war, resistance to the Bitcoin Act, or prolonged ETF outflows could drag BTC toward $70,000.
- Bullish Scenario: De-escalation, bipartisan support for crypto legislation, and strong ETF inflows could push BTC toward $109,312.
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