Bitcoin faces potential decline below $100,000 as Trump announces US-China trade conflict.

The trade conflict that previously unsettled global markets has resurfaced, with Bitcoin now involved in the fray.

On October 15, President Donald Trump announced that the United States had entered a trade war with China, stating:

“We’re in a [trade war] now. We have 100% tariffs. If we didn’t have tariffs, we would have no defense. They’ve used tariffs on us.”

This declaration solidifies a week of escalating tensions following his threat to impose 100% tariffs on Chinese goods.

Significantly, that warning marked the beginning of a monetary standoff with repercussions that extend deeply into global markets.

Consequently, traditional equities fell sharply, while digital assets saw approximately $20 billion in open interest wiped out within a single day.

Data from CoinGlass indicates that Bitcoin and Ethereum were at the forefront of the decline, exacerbating what has already been an unusual “red October” for leading cryptocurrencies.

What is the impact on Bitcoin?

Tariffs function similarly to a hidden tax, increasing the cost of imports, elevating input expenses, fueling inflation, and compelling central banks to maintain elevated interest rates for an extended period. This combination typically drains liquidity from risk assets such as Bitcoin.

In 2018, comparable tariff announcements incited significant volatility that drove Bitcoin below $6,000. This trend appears to be repeating in 2025.

Institutional investors are progressively moving towards safer positions in gold, Treasury bills, and short-duration bonds.

Conversely, Bitcoin, which continues to behave like a high-beta macro asset, suffers collateral damage amid this shift towards safety.

However, the current situation introduces an additional layer of complexity.

Unlike the 2018 cycle, Bitcoin is now regarded as a regulated asset class with substantial ETF exposure and transparent derivatives markets, rather than being solely retail-driven.

Nonetheless, CoinShares’ head of research James Butterfill cautioned in February that the immediate repercussions of tariffs would be “undeniably negative” for Bitcoin.

Butterfill elaborated that tariffs hinder growth, elevate inflation expectations, and incite risk aversion. In this market environment, Bitcoin responds to liquidity trends, leading to short-term volatility.

Traders are increasingly convinced that the likelihood of a sustained Bitcoin uptrend is low this month.

On Polymarket, the probability of Bitcoin reaching $130,000 by the end of the month has dropped below that of it declining to $95,000, illustrating how macroeconomic policy is influencing sentiment in digital assets.

Bitcoin Price Movement Odds on Polymarket (Source: Degen News)

However, Butterfill also noted that the leading cryptocurrency tends to recover more swiftly than equities in a stagflation scenario.

He stated:

“In the long term, Bitcoin’s role as a hedge could be strengthened, especially if tariff policies lead to economic instability.”

Structural shift

Meanwhile, analysts at Bitunix informed CryptoSlate that Trump’s announcement has intensified the economic confrontation between the two nations and altered global risk appetite.

They indicated that the impact is twofold: a short-term liquidity shock and a medium-term structural shift in how capital perceives decentralized assets.

In the short term, increased uncertainty prompts institutions to reduce risk. Funds are reallocated towards cash equivalents and gold, leading to widespread sell-offs in high-liquidity markets like crypto.

According to them, leveraged traders facing margin calls would exacerbate the situation. Notably, this was precisely what triggered last week’s $20 billion liquidation wave.

However, beyond the initial upheaval lies a different consideration. If the trade war remains confined to tariffs and export controls, diminished global growth could suppress crypto demand.

Nonetheless, Bitcoin could reemerge as a geopolitical hedge if the confrontation extends into financial settlement systems. In such a scenario, the US might impose restrictions on cross-border dollar access or payment systems, compelling investors to seek alternatives.

In that case, digital assets could transition from being viewed as “risk assets” to “alternative reserves.” As the Bitunix team articulated:

“The erosion of confidence in the US dollar system could reinforce Bitcoin’s narrative as a ‘de-dollarization’ and ‘alternative value reserve’ asset, creating structural support.”

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