Bitcoin & Ethereum Price Fall Amid U.S.–China Tensions

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why the price of Bitcoin & Ethereum price fall due to the escalation of U.S.-China tensions, what factors drove this decline, and how the human mind—investor sentiment, reactions, hopes, and fears—work behind it. This article primarily focuses on the following points: Background to the incident (reported news), technical and fundamental reasons, investor psychology, risk management, and what to do in such circumstances, and possible future scenarios.

Background to the incident—what happened?

During the period, the U.S. and China imposed new provisions on maritime transport and port fees, further intensifying the trade war. Bitcoin’s price fell to a low of ~$110,023.78, but later recovered slightly and closed the day at ~$113,129—a total decline of ~2.3%. The price of Ether (ETH) also suffered a similar impact, falling ~3.7% to close at $4,128.47. Altcoins (cryptocurrencies other than Bitcoin and ETH) were even more severely affected; they fell by up to 80% on some exchanges.

This decline was a reversal of an existing rally—Bitcoin/ETH had been on a rally just a few days prior, which was hit by this stress. Prior to this, the crypto market witnessed massive liquidations of leveraged positions—approximately $19 billion in leveraged positions was closed. Open interest in the Ethereum derivatives market fell sharply, by approximately 45%. Major news sources also reported that traditional financial markets (e.g., stocks, technology stocks) were also under pressure, with investors shifting from risk assets to safer options.

Technical & Fundamental Drivers on Bitcoin & Ethereum price fall

Technical Factors (Technical / Market Structure Factors) Breakdown of support/resistance levels Many technical analysts observe that if the price breaks a key support level, a rapid decline towards the next levels is likely. For example, if ETH’s $4,000 level was support and it broke, selling could increase. Breakdown of trend / momentum reversal When an uptrend is broken, meaning the bullish momentum subsides, investors begin profit-taking. Derivatives / margin unwinding As mentioned above, when leveraged positions are liquidated, this exerts rapid downward pressure. The ETH derivatives market saw a sharp decline in open interest. Volume collapse / low liquidity During a downturn, if there are fewer buyers and more sellers, the price can fall rapidly.

Human Psychology — How do investor emotions work?

In volatile and rapidly fluctuating assets like the crypto market, investor psychology is as important as technical and fundamental factors. Let’s look at how fear and loss aversion play a role. Fear of loss — When investors see prices falling, they fear further loss and sell quickly. Loss aversion — Psychology suggests that we can’t tolerate losing more than a certain amount of profit. Therefore, investors sell quickly to prevent losses. Panic selling — When a price suddenly declines sharply, some investors panic and sell without thinking. Regret aversion If someone sold early and the price rebounded later, they may regret it.

Therefore, many people sell as soon as the decline begins, so as not to regret it later. Overreaction & recency bias — Focusing too much on recent events — If there were big losses a few days ago, people tend to overestimate them and overreact. For example, let’s say you’re an investor in ETH. The price of ETH suddenly drops. A series of thoughts run through your mind “OMG, my capital is going to be depleted now.” (Fear) “Last week, when ETH was $4,500, it’s now $4,100 a huge drop.” (Anchoring) “If I don’t sell now, the decline will worsen.” (Loss aversion) “Others are selling, so I don’t have to be left behind.” (Herd behavior) “If the price goes back up, I’ll regret selling.” (Regret aversion) These psychological attitudes force investors to make hasty decisions, which can sometimes be inappropriate and even harmful.

Risk Management and What to Do in Such Situations?

If a decline occurs, leveraged positions can be quickly liquidated. Log Outlines (Stop Loss / Take Profit) A stop-loss order (sell if price drops to X) should be placed when the market is entering to protect against a sudden, large decline. Set a take-profit level to secure a profit once it’s made. But be careful—when the market is falling rapidly, the stop-loss can sometimes “slippage” (price incomplete) the order may not be executed at the price you set. Tanking (Scaling in / Scaling out) If you want to make a new investment, consider a lump-sum investment.

Sell partial exits may be a better strategy. Fundamental Check Don’t rely solely on technical signals look at the projects, team, utility, blockchain network strength, user adoption, etc. If a crypto’s fundamentals are weak, the decline could be greater. Strategy Based on Market Cycles Crypto markets have cycles bull and bear. If you identify which cycle you’re currently in, you can proceed more cautiously. Viewing Downturns as Opportunities — If you’ve already taken out some stakes, dip buying during a downturn may be possible, but this requires a lot of vigilance. Mental Preparedness: Develop a specific strategy and stick to it sudden emotional reversals can increase risk. Understand the difference between “luck/speculation” and “long-term vision.”

Possible Future Scenarios and Conclusions of Bitcoin & Ethereum price fall

Further declines are possible in crypto if tensions escalate, or other economic indicators (such as recession fears, high interest rates) persist. If support levels are broken, the decline could continue. Range Bound / Consolidation: The market may remain confined to a range between a downtrend and a rally—neither too high nor too low—investors will wait for signals to emerge. New Bull Run: If crypto adoption, regulatory stability, and technological improvements (Layer 2 scaling, gas fee improvements, etc.) are positive, there may be a possibility of retesting previous peaks—but it’s the long game that can protect investors in such turmoil. Finally, it’s important to approach crypto investing from a long-term perspective – the dream of becoming rich overnight can sometimes lead to significant losses.