Bitcoin Plunges Below $79K as Markets Brace for U.S.-China Trade Turmoil

Bitcoin dropped to $78,892 on Sunday, a 5% fall in 24 hours, dipping below the critical $80,000 threshold that many analysts viewed as a key psychological and technical support level. Ethereum followed with an even steeper slide, plummeting over 9.6% to trade near $1,617. The broader crypto market was also painted red, with altcoins like Solana and Avalanche suffering double-digit losses.

The immediate catalyst for the downturn appears to be renewed trade hostilities between the U.S. and China. On Friday, President Donald Trump’s administration announced sweeping new tariffs on a range of Chinese imports, a move that Beijing swiftly responded to with retaliatory duties of its own. Markets have reacted with alarm, viewing the tit-for-tat measures as the beginning of another trade war, reminiscent of the tensions seen in 2018 and 2019.

The crypto sell-off coincided with a sharp drop in U.S. equity futures on Sunday night. Dow Jones futures fell over 3.2%, S&P 500 futures slid 3.7%, and the tech-heavy Nasdaq plummeted nearly 4.6%. These moves followed a brutal week in which the S&P 500 lost 10.5%, its worst performance since the COVID-era crash in March 2020.

Technical signals also suggest there could be more downside ahead. A bearish “death cross” has appeared on Bitcoin’s daily chart, where the 50-day moving average has crossed below the 200-day moving average. This pattern often signals extended downward pressure, particularly in times of macroeconomic stress.

Traders are now eyeing several key support zones, including $74,000, $65,000, and $57,000. If prices continue to fall, a retest of these levels may be in play. On the upside, Bitcoin would need to reclaim the $87,000 level to signal a potential recovery.

Historically, Bitcoin has been viewed by some investors as a “digital gold”, a hedge against inflation and currency debasement. But recent market action suggests that Bitcoin is still largely seen as a risk-on asset, susceptible to macro shocks just like tech stocks.

Interestingly, traditional safe havens like gold and the U.S. dollar index (DXY) saw moderate inflows over the weekend, suggesting that institutional investors may be shifting their portfolios toward more conservative positions in response to the geopolitical volatility.

With crypto markets sliding and equity futures pointing to a rough open, investors face a highly uncertain week ahead. The return of tariff-driven economic brinkmanship between the U.S. and China is fueling fears of a renewed global downturn, at a time when inflation remains stubborn, interest rates are elevated, and growth forecasts are already under pressure.

As always, markets will be watching closely for further developments out of Washington and Beijing. In the meantime, Bitcoin’s dip below $79,000 may be more than just a technical breakdown—it could be the first domino to fall in a week that reshapes investor sentiment across all asset classes.