Market Analysis

Bitcoin Nears $83K Mark but Struggles as Trade War and Recession Fears Weigh

Amos Simanungkalit · 13 Mar214.1K Views

Image Credit: Reuters

Bitcoin rose on Thursday, recovering from recent losses as market sentiment was slightly lifted by softer-than-expected U.S. inflation data. However, the gains in Bitcoin and the broader cryptocurrency market were limited, as concerns about the ongoing trade war under U.S. President Donald Trump and fears of a recession continued to weigh on investor sentiment.

Earlier this month, Bitcoin had dropped below $80,000 due to heightened risk-aversion, while Trump's Bitcoin reserve plans also failed to spark significant optimism. Despite this, Bitcoin saw some recovery thanks to dip-buying and expectations for more favorable regulation, pushing its price up by 1.8% to $83,511.6 at 01:27 ET (05:27 GMT).

The cryptocurrency's rebound, however, was curbed by persistent concerns about a potential U.S. recession and the escalating trade war, particularly following Trump's 25% tariffs on steel and aluminum, which came into effect on Wednesday. Trump also announced plans to impose even higher tariffs on Europe. These measures are fueling fears that disruptions in global trade could lead to higher U.S. inflation, which may ultimately trigger a recession. Although Trump has downplayed such concerns, the uncertainty surrounding his policies has kept markets cautious.

Risk-heavy assets like cryptocurrencies, which are speculative in nature, tend to perform poorly during periods of heightened volatility and risk aversion. As a result, Bitcoin has underperformed U.S. stock markets this year, losing around 10% year-to-date, compared to a 4.6% decline in the S&P 500 index.

While Bitcoin showed mild gains, other cryptocurrencies followed suit but remained close to recent lows. Ether, the second-largest cryptocurrency, dropped by 0.6% to $1,866.80 after reaching a three-year low earlier in March. Meanwhile, Solana, Cardano, XRP, and Polygon saw small increases, and meme tokens like Dogecoin rose by 3.3%, while $TRUMP gained 4.2%.

The market is now focused on the upcoming U.S. Producer Price Index (PPI) data, scheduled for release later Thursday, which will provide further insights into inflation trends. This data comes just days before a Federal Reserve meeting, where the central bank is widely expected to keep interest rates steady amidst ongoing economic uncertainty.