Bull Trap Ahead? Bitcoin Rally at Risk Amid China Tariff Fallout

Analysts at QCP Capital caution that the recent Bitcoin rally may be setting up for a classic bull trap as US-China trade tensions escalate.

The flagship cryptocurrency made a swift recovery this week, reaching $82,700 in a volatile market rebound. However, Singapore-based trading firm QCP Capital warns that the surge may not be sustainable, citing growing geopolitical risk—specifically the resurgence of the US-China trade war.

Trump’s Tariff Pause Leaves China Out

Markets rallied briefly on April 9 after US President Donald Trump announced a temporary suspension of new tariffs for several countries. Bitcoin mirrored the positive sentiment in equities. However, China was notably excluded from the reprieve, as Trump doubled down on tariffs against Beijing.

Also read: Inflation Eases Now, But Trump’s Trade War Could Undo It All

This selective targeting has heightened fears of a strong Chinese counterpunch, potentially sparking fresh volatility.

“With China singled out so explicitly, market participants are bracing for Beijing’s retaliation,” QCP Capital stated. “Should retaliation materialize in force, the exuberant rally could quickly morph into a classic bull trap.”

Institutional Bitcoin Traders Remain Cautious

QCP noted that despite the recent price surge, institutional traders appear wary. The firm has observed consistent “topside selling” in options for May and June, suggesting that market makers are using the rally to offload positions rather than double down.

This pattern echoes previous periods of macroeconomic stress, where bursts of optimism were often followed by abrupt corrections.

Also read: From Crash to Comeback: Markets Rebound After Trump Tariff Pause

Further complicating the picture is the Chinese yuan’s decline. On April 10, the USD/CNY rate hit 7.35—an 18-year low—fueling speculation that China may devalue its currency to offset the impact of US tariffs.

Former BitMEX CEO Arthur Hayes remarked, “BTC loves money printing and associated currency weakness,” pointing to Bitcoin’s historical appeal during monetary easing cycles.

Currency devaluation often triggers capital flight from China. Sina, co-founder of asset manager 21st Capital, emphasized this trend: “When the yuan weakens, capital doesn’t stay put. It escapes. Some of it flows into gold, some into foreign assets—and a meaningful slice finds its way into Bitcoin.”

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He added that Bitcoin’s role is evolving from speculative hedge to essential reserve asset, particularly in an era defined by geopolitical strife, inflation pressures, and waning confidence in traditional financial systems.

“Add rising tariffs, slowing trade, and a deepening crisis of confidence,” Sina concluded. “The outcome is growing demand for neutral, borderless, incorruptible assets.”