The Bitcoin price has seen a significant drop of 6% from its peak levels, resulting in liquidation events nearing $200 million on Friday, while igniting fresh speculation regarding the future direction of the cryptocurrency.
Experts from The Bull Theory attribute the current downturn to geopolitical factors, particularly President Donald Trump’s announcement regarding hefty tariffs and export controls on Chinese products, which particularly impact essential industrial and strategic materials.
How Tariff Risks Are Affecting Bitcoin Prices
The repercussions of these tariffs, according to the analysts, are complex, introducing risks that may disrupt supply chains, heighten inflation, and decelerate global trade.
Several elements are driving the current sell-off of Bitcoin. Firstly, there is a clear shift in risk, with investors gravitating toward safer options like cash and gold.
Secondly, the impending tariff risks could spur increased inflation, which might delay expected rate reductions. Thirdly, the unwinding of short leverage positions is affecting alternative cryptocurrencies and leveraged Bitcoin assets, intensifying the negative trend.
Finally, the uncertainty around trade policies has crafted an “uncertainty premium,” causing markets to require a discount until a clearer situation unfolds.
Making comparisons to previous market movements, the analysts note that threats of tariffs in 2025 triggered a significant decline in Bitcoin prices and other cryptocurrencies. These recent fluctuations seem to act as liquidity tests, assessing the market’s resilience and eliminating weaker participants prior to a potential recovery.
Analysts Forecast an Optimistic Outlook for BTC
Looking forward, The Bull Theory advises market participants to keep an eye on BTC’s nearest key support zone, especially around the $116,000 level, where buyers have historically come back.
They also emphasize that the reaction of policymakers is vital; if the Federal Reserve (Fed) indicates a readiness to ease monetary policy, a rapid rebound could follow. In contrast, if Trump’s stance on tariffs lessens or becomes clearer, it is likely that market confidence might be restored.
In the short term, analysts predict ongoing downside volatility with possible retests of support levels. However, the medium-term outlook indicates that astute investors may begin to accumulate Bitcoin as the dominant narrative weakens.
In the long run, with anticipated rate cuts and historically solid market performance in the fourth quarter, Bitcoin’s price prospects seem bright. As liquidity returns and market momentum strengthens, Bitcoin’s trajectory often trends upward.
BTC At $130,000 By Month-End?
Market analyst Timothy Peterson has also chimed in, remarking that roughly half of Bitcoin’s gains for October may have already been realized, based on artificial intelligence (AI) simulations.
The analysis presented earlier this week indicated a 50% chance that the Bitcoin price will close the month above $140,000, and a 43% likelihood it would end below $136,000.
However, following the recent drop in Bitcoin prices, the updated AI forecast suggests an expected month-end price of about $130,000, signifying an 11% rise from the current value of roughly $117,300.
Nonetheless, there is now an 18% chance that ‘Uptober’ could end on a negative note, adding another layer of uncertainty to the market’s forecast.
Featured image from DALL-E, chart from TradingView.com.
