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Expert Analysis: How will the SEC’s next move shape XRP’s future? Read more here.
Bitcoin Faces Pressure Amid US-China Trade Tensions
While markets consider the chances of the SEC withdrawing its appeal, bitcoin (BTC) also faced selling pressure as China retaliated to US tariffs. China imposed 15% duties on coal and LNG and 10% tariffs on crude oil, agricultural equipment, large-displacement vehicles, and pickup trucks. Additionally, Beijing announced an anti-trust investigation into Google.
China’s decision to retaliate rather than negotiate fueled fears of a full-blown US-China trade war. Higher US tariffs could push US import prices and inflation higher, potentially forcing the Fed into a hawkish policy stance. Rising interest rates may impact demand for riskier assets such as BTC.
US BTC-spot ETF Market Sees Inflows Amid Strategic Bitcoin Reserve Talks
While BTC trended lower amid rising tensions between the US and China, the US BTC-spot ETF market eyes net inflows. US Crypto Czar David Sacks confirmed the Presidential Working Group on Digital Assets will explore the possibility of a Bitcoin reserve. However, he cautioned that the evaluation process remains in its early stages.
Despite trade-related pressures, ETF inflows suggest sustained investor interest. Hopes for a US Strategic Bitcoin Reserve (SBR) remain a BTC tailwind, boosting demand for BTC-spot ETFs. According to Farside Investors, ETF inflows on February 4 included:
- ARK 21Shares Bitcoin ETF (ARKB) had net inflows of $56.1 million.
- Grayscale Bitcoin Trust (GBTC) reported net inflows of $19.5 million.
- Bitwise Bitcoin ETF (BITB) saw net inflows of $16.1 million.
Excluding BlackRock’s (BLK) iShares Bitcoin Trust (IBIT), the US BTC-spot ETF market saw total net inflows of $91.7 million.
Bitcoin Price Outlook
On Tuesday, February 4, BTC declined by 3.54%, partially reversing Monday’s 3.78% gain, closing at $97,979.
BTC’s near-term price trend remained hinged on multiple factors, including US-China tensions, SBR-related news, the Fed rate path, and US BTC-spot ETF flows.
On Wednesday, February 5, the US ISM Services PMI and ADP employment change data could influence the Fed rate path. Better-than-expected numbers would support a more hawkish Fed policy stance, potentially impacting BTC demand.
Potential BTC Scenarios:
- Bearish case: Rising trade tensions, a hawkish Fed, and stalled SBR discussions could drag BTC below $90,000.
- Bullish case: De-escalating trade risks, a more dovish Fed, and increasing political support for an SBR could push BTC toward its all-time high of $109,312.
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