On March 3, Bitcoin (BTC) experienced a significant decline, dropping from $93,700 to $89,250 in less than an hour, effectively erasing half of its gains from the previous day. This sudden downturn likely incited panic among traders, especially as S&P 500 index futures fell by 1% following China’s announcement of countermeasures against the additional 10% tariffs imposed by the United States.
Despite this sell-off, the potential for Bitcoin to regain the $90,000 support level remains promising. On March 2, US President Donald Trump mentioned that Bitcoin and Ether (ETH) would play crucial roles in the nation’s strategic digital asset reserves. He also hinted that further details would be revealed during the upcoming government crypto summit on March 7.
Bitcoin/USD (left, orange) vs. S&P 500 futures (right). Source: TradingView/Cointelegraph
The main factor behind the drop in Bitcoin’s price on March 3 was the heightened expectations stemming from Trump’s posts over the weekend. Investors soon realized the bureaucratic challenges involved, such as a lengthy approval timeline and the requirement for congressional consent. Furthermore, there were lingering questions about whether the initiative would entail actual acquisitions of these cryptocurrencies.
Source: MetaLawMan
Aurelie Barthere, principal research analyst at blockchain analytics company Nansen, correctly predicted that Bitcoin’s rise to $94,500 over the weekend was unlikely to hold. The 21% increase from the $78,300 low recorded on February 28 appeared exaggerated to some market participants, especially in light of the ongoing trade tensions and broader economic uncertainties.
China’s tariff retaliation could negatively impact the US economy; uncertainty over crypto reserve funding persists
China announced it would retaliate against Trump’s 10% tariffs by targeting US exports, including soybeans and essential minerals like rare earths. This reaction could raise food and technology prices, disrupt supply chains, and decrease rural incomes, with economists estimating a potential GDP shrinkage of 0.3% to 1.3% in the US. Hedge fund manager Anthony Scaramucci cautioned that escalating tensions could lead to economic distress for investors.
James “MetaLawMan” Murphy, a lawyer specializing in crypto legal and business matters, pointed out on X that, even in the unlikely scenario of Congress quickly approving the strategic digital asset reserve, the crucial concern remains its funding source. It’s anticipated that initial approvals would involve halting government crypto asset sales, a decision unlikely to have a significant impact on market prices.
Additionally, Bitcoin traders were concerned by Michael Saylor’s March 2 announcement that Strategy (previously MicroStrategy) did not issue new shares nor increase its Bitcoin holdings beyond 499,096 in the previous week. Although there was no prior notice, some traders had expected the company to “buy the dip.”
Source: RunnerXBT
Crypto trader and analyst RunnerXBT voiced frustration over Strategy purchasing $2 billion worth of Bitcoin at an average price near $97,500 while remaining inactive as BTC fell to the $80,000 range. His analysis indicates that Strategy’s Bitcoin acquisitions above $95,000 could negatively affect the market, as prior instances resulted only in short-lived price increases.
Related: MSTR stock pops 15% following Bitcoin weekend rally
Even with deteriorating investor sentiment towards the global economy, Bitcoin appears likely to reclaim the $90,000 support level, as Strategy is expected to continue accumulating BTC through its $42 billion debt and stock issuance strategy. Michael Saylor has consistently shown no intent to time the market when increasing the company’s Bitcoin holdings, suggesting further purchases irrespective of current price levels.
Regarding hopes for strategic crypto reserves, the timeline is still uncertain, but the long-term effects on Bitcoin’s price are likely to be positive. BTC was designed to thrive when investors view stock market valuations as excessive or foresee corrections in the real estate market. Given these circumstances, the likelihood of Bitcoin exceeding $95,000 in the near future remains high.
This article is for informational purposes only and is not intended to be construed as legal or investment advice. The views, thoughts, and opinions expressed here are solely those of the author and do not necessarily represent the views and opinions of Cointelegraph.
