The start of the week brought a sharp drop in Bitcoin price. Traders are watching the U.S. central bank and former president Donald Trump closely as both factors are fueling tension in the financial world.
Key points
- Over $89 million in Bitcoin trades were liquidated in just 24 hours.
- Investors still poured $1.8 billion into Bitcoin ETFs last week.
- The Federal Reserve’s interest rate decision comes on Wednesday, May 7.
Bitcoin faced pressure over the past two days, with the price falling along with the rest of the crypto market. While there is no single reason behind the drop, several factors are adding to the nervous mood among investors.
One of them is a speech from Donald Trump that included threats of new trade tariffs. That alone has raised concerns about a possible new trade war, especially with China. Trade tensions like these often create fear in global markets — and Bitcoin is not immune to that.
High-risk traders took the biggest losses
It helps to understand how some traders use leverage. That means they borrow money to make bigger trades, hoping to profit quickly. But when prices fall fast, they can lose it all in seconds. That is exactly what happened over the past day — about $89 million in leveraged Bitcoin trades were wiped out, according to CoinGlass.
These quick liquidations usually happen when traders use borrowed money and the price moves too far in the wrong direction. It triggers automatic sell-offs, which adds more pressure to the price.
All eyes on the Fed
The U.S. central bank, also known as the Fed, will announce its interest rate decision on May 7. If they sound worried about the economy or warn about a possible recession, it could lead to even more uncertainty in the market.
When central banks raise interest rates, investors often shift to safer assets like cash or gold. That tends to make people pull back from higher-risk assets, including Bitcoin. However, if the Fed keeps rates steady and avoids alarming language, Bitcoin might get some relief.
ETF money keeps flowing in
Despite the short-term price dip, large investors continue to put money into Bitcoin through Bitcoin spot ETFs. On May 2 alone, these ETFs pulled in $675 million, showing that long-term confidence remains strong.
For the past week, Bitcoin accounted for $1.8 billion in ETF inflows — the highest among all digital assets. This matters because it shows that while some traders are panicking, institutions are still buying.
Analyst Quasar Elizundia from Pepperstone pointed out that Bitcoin can still move higher if ETF inflows stay strong and the Fed avoids sending a negative message. But if fear of a recession grows, the market could cool off for a while.
Trade tensions still in play
Trump’s recent comments on tariffs show that his trade war with China is far from over. Even though things seemed to calm down in recent weeks, the market has not forgotten how quickly policies can change. For now, the message is clear: uncertainty remains.
Gold prices have already started to climb again, which usually means investors are looking for safety. And when that happens, Bitcoin often has to fight harder for attention — especially from more cautious buyers.
What we can expect next
We do not know how the economy will look three months from now, but what happens this week could give us a clue. The Federal Reserve’s update, combined with ongoing global tension, will likely play a role in shaping Bitcoin’s short-term direction.
If you are holding Bitcoin or thinking about buying in, it is worth watching how the market reacts after the Fed meeting. A calm tone could help prices bounce back. But a strong warning or aggressive policy shift might lead to more hesitation.
At time of writing, Bitcoin is trading at $94,450, just about level over the last 24 hours.
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