Key Points
- Bitcoin (BTC) experienced a sharp recovery on Feb. 4, surpassing $102K after a significant drop the previous day.
- The recovery was driven by a halt in tariff hikes and a massive liquidation of speculative bets.
On February 4, the cryptocurrency market saw a significant rebound, with Bitcoin’s value soaring beyond the $102K mark. This surge came after a substantial decline the day before.
Bitcoin’s Recovery
Bitcoin (BTC) managed to rise above $102K after hitting a low of around $91,229 the previous day. This drop was a result of the announcement of major tariff increases by U.S. President Donald Trump. Michael van de Poppe, a well-known cryptocurrency market analyst, noted that Bitcoin’s swift recovery was anticipated due to market volatility. He predicted a new all-time high in February, provided Bitcoin remains above the $93,000 level.
The decline of Bitcoin on February 3 was incited by market apprehensions about Trump’s decision to impose 25% tariff hikes on Canada, Mexico, and China. This decision sparked worries about a potential trade war. However, the rebound on February 4 occurred after Trump’s subsequent decision to temporarily suspend the tariff increases on Canada and Mexico, following discussions with the presidents of these countries.
Impact of Speculative Bets Liquidation
Another potential catalyst for Bitcoin’s recovery was the extensive liquidation of speculative bets on February 3. This marked the worst single-day liquidation in history, even surpassing the collapses of Terra (LUNA) and FTX, as per cryptocurrency analyst Miles Deutscher. As short sellers rushed to mitigate their losses, a wave of buying pressure boosted Bitcoin’s upward momentum, further increasing its value.
Lastly, the signing of a new executive order by the U.S. President, which instructs the creation of a sovereign wealth fund to be led by the U.S. Treasury and Commerce Departments, may have spurred additional interest in Bitcoin.