Bitcoin Back in the Headlines as Unexpected U.S.-China Trade News

Bitcoin has soared past $86,000, driven by unexpected U.S.-China trade news that could reshape investor sentiment in a big way.

Bitcoin (BTC) prices surged past $86,000 on Monday, fueled by unexpected U.S.-China trade news that could be shaping investor sentiment in a big way. But while the bulls are already eyeing the $90K mark, some analysts warn this could also be a classic setup for a market reversal.

What Happened: Over the weekend, Bitcoin rose 2.41% to reach $85,379 by 08:00 AM ET (12:00 GMT). The increase followed a late-Friday announcement from U.S. Customs and Border Patrol confirming tariff exemptions for major tech imports like smartphones, routers, and select computers. These exemptions fall outside the aggressive 125% tariffs that former President Donald Trump had imposed earlier this month.

As CN Wire reports, it’s still unclear whether all smartphones will escape other existing levies. But the move marks a softening tone in the trade war narrative, ultimately putting less inflationary pressure on the market and leading to more optimism around Federal Reserve rate cuts. And of course, with the focus on risk assets, the crypto sphere is also likely to see a build-up of cash flows.

Market intelligence firm Santiment captured the moment in a post on X, formerly Twitter, over the weekend, stating:“Trump’s weekend tariff exemptions have led to an instant crypto market rise… Bitcoin has already hit a high of $85.9K.”

However, despite the price rally, U.S.-based Bitcoin ETFs saw massive outflows leading into the weekend. According to data from Farside Investors, three major Bitcoin ETFs—iShares (NYSE:IVZ) Bitcoin Strategy ETF (NYSE:IBTC), Invesco (NYSE:IVR) Bitcoin Trust ETF (NYSE:BITO), and Coinshares Physical Bitcoin (BTC) -€” saw a collective outflow of $707.9 million over the past week.

“In total, $707.9 million flowed out of U.S. BTC ETFs last week. Although outflows slowed to just $1 million by April 11, this divergence raises questions: Is this rally sustainable, or is smart money exiting early?” the firm added.

While futures markets saw inflows of $1.7 billion, suggesting some optimism, ETF flows remain one of the most reliable indicators of long-term market direction—and right now, they’re flashing a warning.

Where Next For Bitcoin?

Analysts are now keeping an eye on two key scenarios for Bitcoin. A bullish continuation could be triggered by further tariff easing, improving U.S. economic indicators like April’s Consumer Price Index and employment data, progress on the Bitcoin Act, and renewed ETF inflows. This scenario could push Bitcoin towards $90,000, setting the stage for a run at the $100K milestone.

But a bearish reversal could arise from renewed trade war tensions, disappointing macro data like March’s retail sales report and April’s CPI, or further ETF outflows. This scenario might send Bitcoin back towards $70,000, with crucial support levels at $80,000 and $76,660.

From a technical perspective, Bitcoin remains below its 50-day and 200-day Exponential Moving Averages (EMAs), typically bearish territory. A break above $86,263 would signal strength and open the door to $90,742, a crucial resistance level. But failure to hold $85,000 could quickly trigger a slide towards $80,000.

The sharp rally in Bitcoin on trade relief news has caught markets off guard, especially given the recent pessimistic outlooks from economists like Paul Krugman. While the excitement is real, the backdrop is anything but stable. With ETF outflows lingering, rate cut bets still uncertain, and regulatory oversights like the Bitcoin Act still in flux, this may not be the all-clear signal bulls are hoping for.

The next few days will be critical as traders keep an eye on the crucial $90,000 level. If Bitcoin manages to break through this resistance, the momentum could really take over. But if the price fails to sustain above $85,000, then the market may have just witnessed another bull trap disguised as a breakout.