Bitcoin Price at Risk of a Crash as Wall Street Pros Warn of More Turbulence

Bitcoin price suffered a major reversal on Tuesday, confirming that the recent surge was a dead-cat bounce. BTC plunged from this week’s high of $116,000 to the important support at $110,000.

This crash could accelerate as the US Dollar Index (DXY) jumps, China boosts pressure on the United States, and Wall Street analysts warn on more turbulence ahead.

Bitcoin Price Crashes as China Boosts Pressure

The BTC price is at risk of further downside as tensions between the United States and China continue. In a statement, China announced that it would sanction five US units of the Hanwha Ocean, escalating tensions that have been going on in the past few weeks.

The new escalation came a day after market participants estimated that the two sides will reach an agreement on trade in the coming weeks, especially at the APEC meeting where Donald Trump and Xi Jinping will meet.

In a statement on Friday, Trump threatened to impose sweeping 130% tariffs on all goods entering the US from China. This was in response to some measures that China announced last week, including an investigation into Qualcomm and threats to limit rare earth materials shipping.

China has likely become more emboldened after a report showed that its exports are seeing strong demand in other countries. Exports to the United States plunged by 27% in September, while those in other countries grew by double digits.

A sustained trade war would hit Bitcoin in that it would lead to higher inflation, which will prevent the Federal Reserve from cutting interest rates as doing so will lead to higher inflation in the country. This explains why the US Dollar Index (DXY) has jumped to the highest point in five months. It also explains why US bond yields have continued rising this week.

Wall Street Analysts Warn About Turbulence in the Market

Meanwhile, the Bitcoin price is facing a major risk as Wall Street professionals warn of more turbulence in the stock market, which is expected to translate into further weakness in the crypto market.

In separate reports cited by Bloomberg, analysts at Evercore, Morgan Stanley, and JPMorgan warned that the stock market may crash in the near term, citing geopolitics, Federal Reserve policy, and valuation.

A major risk in the market is that stocks have become highly overvalued because of the ongoing demand for artificial intelligence (AI) solutions. As a result, there is a risk of a crash, especially now that analysts are warning of a major bubble in the AI industry.

Additionally, the S&P 500 Index is now in its fourth year of a bull market, indicating that a pullback could occur soon. Such a move would hit Bitcoin price because the crypto and stock markets tend to have a correlation.

Bitcoin price has other potential risks that may hurt its performance. For example, Bitcoin treasury companies have reduced their purchases, with Metaplanet remaining without any purchases for two weeks. Most of these firms have not bought these coins as their NAV multiples plunged.

There are also signs that BTC ETF inflows have slowed recently. Spot Bitcoin ETFs had $335 million in outflows on Monday, a big increase from the previous $4.5 million.

Bitcoin Price Technical Analysis

The weekly timeframe chart shows that the Bitcoin price has formed a highly bearish chart pattern. It has formed a large rising wedge, comprised of two ascending and converging trendlines that are now nearing their confluence, which often leads to further downside.

The coin has also formed a bearish divergence pattern as the Relative Strength Index (RSI) and the Percentage Price Oscillator (PPO) have continued moving downwards despite the coin being in an uptrend.

Therefore, there is a risk that the coin will plunge to the key support level at $100,000. A move below that level will point to more downside, potentially to the key support at $73,860, the lowest level on April 7.