U.S. Tariff Conflict Nears Its End – Will Bitcoin Break Out or Pull Back?

Introduction: The Interplay Between Geopolitics and Asset Prices

Since early 2025, global trade tensions have eased slightly. The U.S. and China have paused new tariffs, and negotiations are underway between the U.S. and Europe over EV subsidies—reducing overall market risk sentiment. While these may seem unrelated to crypto, they actually have significant implications for Bitcoin.

Why? Because when uncertainty fades, capital tends to shift from safe-haven assets like the U.S. dollar or gold toward risk assets such as equities—and even Bitcoin. Though still volatile, crypto can become an attractive inflow destination in a risk-on environment with abundant liquidity.

In the following sections, we’ll examine Bitcoin’s price behavior through the lens of macroeconomic trends, capital movements, technical structure, and hidden variables.

Macroeconomic Shift: Springtime for Risk Assets?

1. A Weaker U.S. Dollar Sparks Outflows

Since early 2025, the U.S. Dollar Index (DXY) has been on a downtrend, indicating lower demand for safe-haven assets and improving economic confidence.

• DXY Breakdown: As of late June to early July 2025, the DXY fell below 97.9—a three-year low—signaling declining risk aversion.

• Despite a brief rebound (~3%) at the end of July, the index remains over 10% below its yearly high.

• A weaker dollar generally benefits USD-denominated assets by lowering the opportunity cost of holding Bitcoin.

2. Rising Rate-Cut Expectations Loosen Monetary Conditions

• While Fed Chair Powell has held off on rate cuts, weak labor and inflation data have led markets to anticipate a cut as early as fall 2025.

• CME FedWatch shows over 80% market expectation for a September rate cut.

3. Equities Rebound: Reinforcing Bitcoin’s Risk Asset Status

• Correlation with Nasdaq: Bitwise reports a 90-day rolling correlation between Bitcoin and the Nasdaq index of over 0.7. Another study pegs Bitcoin’s beta at 0.62—showing Bitcoin is increasingly behaving like a tech stock.

• As tech stocks lead the rally, Bitcoin has rebounded in sync.

4. Massive ETF Inflows Signal Institutional Confidence

• In July 2025, U.S. spot crypto ETFs saw a record $12.8 billion in inflows. Bitcoin ETFs alone attracted $6.02 billion—47% of the total.

• On July 25, Bitcoin ETFs recorded $226.6 million in daily inflows, led by Fidelity and BlackRock.

• Even after a mild pullback on July 30, ETFs posted a net inflow of $47.1 million, with IBIT as the leader.

Bitcoin Market Watch: What Does This High-Level Consolidation Mean?

1. Key Price Ranges and Timeline

• Breakout to All-Time High: On July 13–14, 2025, Bitcoin surpassed $123,000, setting a new all-time high.

• Consolidation Zone: From late May to mid-July, BTC hovered between $102,000–$112,000 before breaking out.

• Latest Range: According to Glassnode, Bitcoin is now consolidating between $105,000–$125,000.

2. Technical Levels: Support, Resistance & Volume Trends

Resistance:

• Strong selling pressure exists around $112,000–$116,000.

Support:

• The $111,900–$112,000 range is a critical demand zone. A break below may trigger a short-term pullback.

• Additional support lies around the $108,000 trendline and $102,000 recent low.

Volume & Volatility:

• Trading volume has shrunk during consolidation, suggesting indecision.

• From May 2025, BTC dropped nearly 30% from $109,000 to $74,000, then bounced back into the current range—with volume declining in tandem, signaling a wait-and-see market.

3. Fundamentals & Capital Flow Analysis

ETF Trends:• Inflows into U.S. crypto ETFs totaled $12.8B in July 2025, with Bitcoin ETFs capturing $6.02B (~47%).

• On July 11, Bitcoin ETFs saw a record $1.18B in daily net inflows, fueling the breakout above previous highs.Institutional Behavior:

• Although $812M in net outflows occurred in August, analysts attribute this to short-term profit-taking.

• Institutional players like Millennium Management and Brevan Howard trimmed holdings, while university endowments and sovereign wealth funds (e.g., Abu Dhabi’s Mubadala, with nearly $400M in BTC ETFs) continued accumulating.

4. Interpretation: What This High-Level Consolidation Tells Us

A Calm Before the Breakout:

• The extended consolidation between $100k–$110k and shrinking volume resembles past mid-bull-cycle patterns.

• With supportive capital and positive catalysts, a breakout could be imminent.

Battle Between Bulls and Bears:

• Key zone testing reveals real-time strength of both sides, reflected in price and volume action. What happens next could decide the trend's direction.

ETF Support Strengthens Bull Case:

• Retail speculation alone can’t sustain upward momentum. Continued ETF and institutional inflows provide a solid floor.

• If volume surges during a resistance breakout, it would strongly validate the bull trend.

Key Variables and Breakout Catalysts

1. Fed Policy Trajectory

• If inflation cools and employment weakens, the Fed may begin rate cuts by year-end 2025.

• Lower rates mean looser liquidity—a strong tailwind for volatile assets like BTC.

• However, stronger-than-expected data could delay cuts, cooling risk appetite.

2. Political and Regulatory Uncertainty

• U.S. Election Year (2025): Candidate stances on crypto could reshape regulatory expectations.

• Anticipation of a crypto-friendly administration may lead to early price reactions.

• China’s crypto policy also remains a wildcard. Any sign of easing could spark capital inflows from Asia.

3. Sector Rotation and Market Sentiment

• AI stocks have soared in recent years. If overvaluation leads to outflows, Bitcoin may become the next capital magnet.

• As investors seek "the next big thing," crypto’s high-risk, high-reward profile could bring speculative capital back.

Conclusion

Bitcoin’s high-level consolidation in 2025 isn't stagnation—it’s a preparatory phase before a directional shift. As global liquidity, policy, and sentiment interact, price hovers between pressure and support zones—reflecting a market that remains highly sensitive and cautious.

In the short term, any shift in Fed policy, ETF flow trends, or geopolitical headlines could act as the catalyst to break this stalemate and trigger Bitcoin’s next major move.

🚀 Ready to get started? Register with ZONE Wallet today and invest with peace of mind!

[download-app]

About ZONE Wallet

ZONE Wallet is a blockchain investment gateway designed for Taiwanese users. It combines full regulatory compliance, cutting-edge security, and TWD transaction support, with a mission of making “every crypto transaction safe and secure.” Start building your crypto portfolio with ease—today.Investing in virtual assets carries risks related to price volatility and liquidity. The above content is for reference only and does not constitute any financial advice. Please carefully assess your financial situation before investing and be cautious of potential fraud.