Bitcoin (BTC) bulls break above $105,000 after US and China agree to slash tariffs

Bitcoin (BTC) bulls cheered a major development in the ongoing US-China tariff talks, with the cryptocurrency climbing over the $105,700 mark on May 12

The US and China have agreed to slash tariffs on each other's goods, according to a report by Bloomberg on May 11. The move could help to defuse trade tensions between the world’s largest economies and may also spur new interest in cryptocurrencies like Bitcoin (BTC).

The agreement, which was reached by US Treasury Secretary Scott Bessent and Chinese Vice President He Lifeng in Geneva, will see the US lower tariffs on Chinese goods from 145% to 30%. In return, China will reduce its duties on US imports from 125% to 10%.

The deal also includes a provision for both countries to continue discussing macroeconomic issues in the coming months.

The move comes as trade tensions between the US and China have crippled bilateral trade and slowed the global economic recovery. The two countries have imposed tariffs on nearly $700 billion in goods since 2018, sparking a tit-for-tat trade war that has raised the cost of goods for consumers and businesses.

The tariffs have also had a negative impact on the stock market, with the S&P 500 futures down 0.2% on May 11. In contrast, gold is up 1.5%, suggesting a strong demand for safe-haven assets.

Bitcoin, a highly volatile cryptocurrency, has been trading in a holding pattern since January, consolidating in a bull flag pattern on the weekly chart.

This pattern usually indicates a bullish continuation after a strong initial uptrend, which is exactly what happened as the crypto experienced a sharp rally from lows of around $15,000 in autumn 2023 to reach highs of nearly $110,000 in January.

Afterward, Bitcoin's price faced consolidation, forming a channel while moving downward. This moves the bull flag's breakout point to align with the chart's upper trendline.

As of May 11, Bitcoin experienced a breakout from the bull flag with slight volume increases. This signals the continuation of the previous bull market, and the pattern's projected upside target is around $150,000.

This is calculated by measuring the initial flagpole's height, which is the distance from the pattern's starting point to its highest peak. In this case, it's roughly $40,000 from the December 2023 lows to January's highs.

Then, add that amount to the breakout point, placing the implied target around the $150,000 zone.

At the time of writing, Bitcoin is trading at $104,000 and is showing signs of slowing down after a rapid ascent.

Relative strength index (RSI) is indicating overbought conditions on the daily chart, and some analysts are suggesting caution as Bitcoin's sentiment is becoming "euphoric."

According to European Head of Research at Bitwise Dragosch, their Cryptoasset Sentiment Index has reached its highest level since November 2024.

Dragosch adds that this level of sentiment has typically coincided with local market tops in the past.

The chart highlights several instances where peaks in sentiment, such as those in April 2022, October 2023, and November 2024, were followed by short-term corrections or periods of sideways price action.

This suggests that the strong bullish momentum may be used up quickly, setting the stage for a potential near-term pullback despite the long-term outlook remaining bullish.