Bitcoin plunged nearly 4% on May 23 as a fresh salvo in the U.S.-EU trade dispute rattled global risk sentiment.
The sudden reversal dragged BTC down to about $107,400, erasing a strong start to the week and catching leveraged traders off-guard.
The slump came minutes after President Donald Trump declared on Truth Social, “Our discussions with them are going nowhere!”
He added, “Therefore, I am recommending a straight 50% Tariff on the European Union, starting on June 1, 2025.”
Traders quickly described the slide as a textbook headline-driven “risk-off” reaction.
Popular market analyst Skew summed up the move as a “Nice aggregate flush of long leverage & de-risk selling from spot,” and later lamented, “All driven by headlines once again.”
Derivatives Take the Hit
Futures and options bore the brunt of the volatility.
Data from CoinGlass showed nearly $350 million worth of long positions liquidated in four hours, with 24-hour liquidations topping $500 million.
The shake-out briefly pushed BTC below the psychologically important $110,000 mark, turning that level into immediate resistance.
Support Lines in Focus
Short-term traders are now fixated on whether BTC can hold the zone just under $110,000.
Chartist Crypto Caesar warned, “We need to hold the green zone,” referring to a support band visible on the four-hour chart.
Order-book monitors note thin sell walls above spot price, prompting trader Poseidon to remind followers, “Don’t forget: above here, it’s nothing but thin air. No resistance in sight.$BTC”
Yet Skew cautions that price must “auction above” $110,000 to reignite momentum, adding “Front ran $110K tag” after the bounce stalled.
Macro Crosscurrents
The tariff flare-up also dinged U.S. equities, with the S&P 500 opening 1% lower and the Nasdaq Composite off 1.2%.
Analysts say the episode highlights how traditional and digital markets are increasingly interlinked, especially when macro policy shocks appear.
The Kobeissi Letter observed that too much tariff pressure risks unwinding popular bond arbitrage trades, while too little pressure risks stoking inflation expectations—leaving policymakers in a bind.
Bitcoin’s correlation with risk assets has tightened in 2025, yet its growing status as a macro hedge keeps dip-buyers alert.
Outlook
With BTC still up roughly 25% in the past month, bulls remain reluctant to concede the uptrend.
ETF inflows, improving regulatory clarity and renewed corporate balance-sheet demand continue to underpin longer-term optimism.
For now, however, the market waits to see whether trade-war rhetoric cools or escalates ahead of June 1, while chart watchers scan $105,000–$107,000 for support.