Bitcoin Bearish Signal Not an Immediate Concern, But Tariff Fears Could Stir Volatility
A key momentum indicator that previously signaled a bitcoin (BTC) surge post-election has now flipped to a bearish reading, coinciding with President Donald Trump’s escalating tariff rhetoric. Although the new signal raises concerns, it does not pose an immediate threat to BTC.
The moving average convergence divergence (MACD) histogram, a key tool for assessing trend strength, has shifted to the downside. This indicator is calculated by subtracting bitcoin’s average price over the last 26 weeks from the average over the past 12 weeks, with the difference plotted as a histogram. When the MACD crosses above zero, it suggests bullish momentum, while a crossover below zero signals a bearish shift.
The latest reading on bitcoin’s weekly chart shows the MACD dipping below zero, signaling potential downward momentum. However, it’s important to note that the previous MACD crossover in mid-October was positive, strengthening the case for a rally toward $100,000. Currently, bitcoin’s price remains stuck in the $90,000 to $100,000 range, with recent fluctuations narrowing between $95,000 and $100,000. This lack of clear direction reduces the immediate impact of the bearish MACD reading.
Indicators like the MACD are based on price action, not the other way around. While bearish signals can be worrying for technical traders, it’s essential to remember that the indicator needs confirmation from price action. In mid-October, the positive MACD signal was validated by a breakout in bitcoin’s price.
Geopolitical Risks and Inflationary Pressures Could Add Downside Volatility
Despite the bearish MACD signal, other macroeconomic factors are contributing to concerns that could bring volatility to bitcoin. One major risk is President Trump’s tariff rhetoric, which, if enacted, could lead to higher bond yields and negatively impact risk assets. On Monday, Trump is expected to announce new 25% tariffs on steel and aluminum imports, in addition to planned duties on other metal imports later this week. He has also hinted at raising tariffs on goods imported from the European Union later this month, according to UBS.
These developments are already affecting consumer expectations, as evidenced by the University of Michigan’s consumer sentiment survey, which revealed an increase in inflation expectations for the year ahead. February’s inflation forecast jumped to 4.3%, up from 3.3% in January—its highest level since November 2023. This inflationary outlook may prevent the Federal Reserve from cutting rates quickly, as the market begins to price in risk premiums due to tariff concerns.
Alfonso Peccatiello, author of Macro Compass, pointed out on X that the market is pricing in a long Fed pause, with growth holding steady. Even if inflation drops to the target 2% rate, the Fed may not rush into rate cuts.
The upcoming U.S. Consumer Price Index (CPI) report for January, due on February 12, will likely offer more clarity on inflation trends, potentially influencing both broader markets and bitcoin’s price action. Should the market react negatively to these macro factors, bitcoin could face increased pressure, with the $90,000 level serving as a critical support point to watch. If breached, this could validate the bearish MACD signal, confirming a shift in momentum.
