Bitcoin has recently reached new highs, touching $82.7K, leading many to believe the bullish momentum is here to stay. However, crypto trading firm QCP Capital has issued a cautionary warning, cautioning that the current price rebound could turn into a “classic bull trap.” The firm’s latest analysis, shared with its Telegram subscribers on April 10, highlights the potential risks of the ongoing US-China trade war, suggesting that the markets may be in for a sharp reversal if China retaliates.

According to QCP Capital, the rally in Bitcoin and altcoins is largely driven by a recent decision by US President Donald Trump to pause many new trade tariffs. This move temporarily alleviated market concerns, triggering a short-term relief rally that saw Bitcoin and global stock markets rising. However, China has been excluded from the tariff relief, with Trump opting to increase tariffs on Chinese goods. As a result, QCP warns that markets are now bracing for China’s counterpunch, which could quickly turn the current rally into a bull trap, leaving crypto traders with positions that could quickly lose value.

The firm points out that such a scenario could mirror the volatile behavior seen earlier this week when a rumor about tariff pauses sent stock markets into a frenzy, only to reverse once the news was not confirmed. QCP emphasizes caution, noting that the markets may be reacting to temporary factors rather than a sustainable long-term trend. They have observed significant selling activity from market makers in May and June, suggesting that the rally may be a prime opportunity for some to offload unwanted positions.

In addition to these concerns, there is also the possibility of Bitcoin benefiting from China’s potential actions in the trade dispute. As the Chinese yuan weakens in response to the escalating trade war, capital is likely to flow out of the country. Some of this capital, according to experts like Sina, co-founder of asset management firm 21st Capital, is expected to find its way into Bitcoin. The idea is that Bitcoin, being a decentralized and borderless asset, could offer a safe haven amid the turmoil in traditional financial systems.

The historical trend of capital flowing into Bitcoin during times of currency devaluation is a key factor in this narrative. The yuan’s devaluation to 18-year lows has raised concerns about China’s broader economic stability. In this context, Bitcoin is becoming increasingly attractive as a neutral, incorruptible asset that is not subject to the control of any single nation. Experts believe that as the global trade situation worsens, demand for Bitcoin could grow, not just as a hedge, but as a necessary store of value in an unstable economic landscape.

While some analysts speculate that Bitcoin has not yet seen its long-term price bottom, others are more optimistic about its future potential. Several price targets have been suggested, with many focusing on the $70,000 level as a possible foundation for a sustained rebound. However, QCP Capital’s cautionary stance reminds traders that the current rally might not be sustainable, urging a more measured approach to the volatile market conditions.

In summary, while Bitcoin’s recent price surge is encouraging, the uncertainty surrounding the US-China trade war presents a significant risk. With potential Chinese retaliation on the horizon, crypto investors should be wary of a bull trap that could lead to sharp price corrections in the near future. As always, thorough research and caution are essential when navigating the volatile crypto market.