Bitcoin price staged a strong recovery after Donald Trump and JD Vance left the door open for a potential deal with China. BTC price rose to $114,000, up sharply from last week’s low of $108,000. This article explores why it is rising and the potential risks.
Why Bitcoin Price is Rising Today
Bitcoin price is rising as investors buy the dip after the recent crash that pushed it to the lowest level in weeks. It is common for investors to buy the dip after a substantial drop, such as when it dropped at the onset of Donald Trump’s trade war.
The coin is also jumping after Donald Trump and JD Vance signaled openness to a China deal after the recent escalation, in which Trump threatened to impose tariffs of over 130% at the end of the month.
China has also announced that it would impose tariffs on US ships docking in its waters, start export controls on its rare earth metals, and investigate American companies. In a statement, Trump noted that he was willing to do a deal with China, saying:
“Don’t worry about China, it will all be fine! Highly respected President Xi just had a bad moment. He doesn’t want Depression for his country, and neither do I. The U.S.A. wants to help China, not hurt it!!!”
The two sides will likely reach an agreement later this month when Trump and Xi Jinping meet in South Korea at the APEC Summit. In most cases, the two sides normally escalate and then de-escalate over time.
The Bitcoin price is also rising as investors anticipate that the Federal Reserve will cut interest rates in the upcoming meeting due to the deteriorating labor market and softening economy. Bitcoin and the crypto market do well when the Fed is cutting rates.
READ MORE: Crypto Fear and Greed and Altcoin Season Index Slumps as Losses Mount
BTC Price Faces Potential Risks
There are potential risks that could hit Bitcoin in the coming weeks. First, there is a risk that the rebound is a dead cat bounce (DCB), which is a temporary rebound that happens when an asset is in a downward trajectory. In most cases, assets tend to fall after the temporary rebound.
The other risk is that the weekly chart shows the coin has formed a giant rising wedge pattern, characterized by two rising and converging trendlines. In most cases, this pattern often leads to a strong bearish breakout.
Bitcoin has also formed a bearish divergence pattern as the Relative Strength Index (RSI) and the MACD have continued falling despite the coin being in a bull run.
A good example of the rising wedge at work is in the daily chart of the Dow Jones Index. This chart shows that the index formed a rising wedge, with its two lines nearing convergence last week, leading to a strong bearish breakdown.
More downside for the Dow Jones and other American indices, such as the S&P 500 and the Nasdaq 100, will likely lead to a steeper crash of Bitcoin and altcoins.
READ MORE: Will the Crypto Market Go Back Up Soon?
