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Read expert analysis on what could drive XRP to new highs here.
US Tariffs and Bitcoin Demand – What’s Next?
On February 27, US tariff developments weighed on market sentiment. A day earlier, President Trump announced plans to proceed with higher tariffs on Canada and Mexico while threatening levies on the EU.
Bitcoin (BTC) has fallen from a January 31 high of $105,933 to to below $85k. Economists expect higher tariffs will drive US import prices and inflation higher, potentially delaying Fed rate cuts. A more hawkish Fed stance could raise borrowing costs, impacting demand for risk assets.
Significantly, BTC’s recent slump could also cast doubt on Congress approving the Bitcoin Act. In late 2024, Senator Cynthia Lummis introduced the bill, proposing the US government acquire one million BTC over a five-year period, with a mandatory 20-year holding period.
However, lawmakers may raise concerns about price stability and vote against a US Strategic BTC Reserve (SBR). Fading optimism toward BTC becoming a strategic reserve asset has contributed to BTC’s failure to reclaim the $100k handle, with prices dropping below $85k.
Investors will likely need to see concrete progress toward a US SBR to shift the supply-demand balance in BTC’s favor.
US BTC-Spot ETF Market Registers Sizable Outflows
US BTC-spot ETFs have seen continued outflows, adding pressure on the market.
According to Farside Investors, ETF issuers reported net outflows of $754.6 million on February 26. Wednesday’s outflows extended the outflow streak to eight sessions. Issuers face the prospect of a ninth consecutive day of outflows on February 27, further pressuring BTC.
Market sentiment remains fragile. Crypto intelligence platform Santiment commented:
“Traders are showing a very high level of confidence that this dip is ‘the one to buy’, according to the spike in discussions across X, Reddit, Telegram, 4Chan, BitcoinTalk, and Farcaster. Ideally, we are waiting for this crowd enthusiasm to die down as a signal that enough pain has hit retail traders to justify a bounce. Markets move in the opposite direction of the crowd’s expectations, so look for declining optimism and shrinking levels of #buythedip calls as a bullish signal.”
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