On May 25, 2025, Bitcoin dropped below $107,500 as a result of President Donald Trump’s announcement of a 50% tariff on European Union imports. This change caused havoc in the crypto markets, turning recent gains into losses and triggering a sharp 1.6% pullback in BTC’s price.
Compression Zone Emerges as Key Technical Battle Unfolds
Following the tariff announcement, Bitcoin was able to create a robust resistance near $108,300, with support building between $106,700 and $107,000, creating what analysts are calling a “compression zone,” where the price is being compressed between major fair value gaps. Trading volume became heavier on May 24 during a sharp 30-minute swing from $107,373 to $107,671, a sign of heavy interest at these levels.
“There’s a significant tug of war happening right now,” said crypto strategist Jamie Mercer. “If bulls can reclaim $109k-$110k, a push toward $122k is likely, but a drop below $107k could test liquidity near $106k. For context on recent bullish setups, check out Bitcoin Traders Eye Breakout to New Highs as Trump Says Tariff Deals Progressing.
Macro Headwinds and Institutional Optimism
The broader crypto market continues to fuel from ongoing macroeconomic shocks. While BTC and ETH slipped, some altcoins like Solana showed good strength, along with institutional interest staying strong. U.S. spot Bitcoin ETFs attracted $934 million in inflows on May 22 and another $608 million on May 21, showing long-term confidence from major players.
The gap between institutional accumulation and retail selling highlights strategic positioning. For a full look into how capital flows are changing, visit CoinShares’ Digital Asset Fund Flow Reports.
What Seasonality Tells Us
Bitcoin’s recent price compression is going hand in hand with seasonal trends. Historically, May has been a bearish month for crypto. As detailed in Bitcoin Traders Brace for ‘Sell in May and Go Away’ as Seasonality Favors Bears, the combination of geopolitical tension and seasonal selling could be creating short-term pressure.
Some analysts are still arguing that this season presents an opportunity to buy. If Bitcoin can clear the headwinds and reclaim key resistance levels, it may give itself the opportunity to go even higher going into the summer.
Looking Ahead: Breakout or Breakdown?
BTC’s reaction to Trump’s tariff echoes previous market behavior during major policy shifts. This volatility represents how global headlines cause crypto to react so strongly and often create unpredictable moves. Yet, the recent ETF inflows suggest that institutional convictions remain strong, especially with long-term holders.
Market watchers are locked in on $107k support and $108.3k-$110k resistance. A slight break could now determine Bitcoin’s near-term direction.
Source
This article is based on: Bitcoin Drops Below $107.5K as Trump Tariff Threat Triggers Crypto Sell-Off
Trump’s Tariff Warning Hits Crypto: Bitcoin Slides, ETFs Still See Inflows
Further Reading
Deepen your understanding with these related articles:
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- Bitcoin Jumps Above $97K as Traders Optimistic U.S.-China Trade Deal Possible
- Bitcoin eyes gains as macro data makes US recession 2025 ‘base case’
Nicholas Newman is a 19-year-old based in Westchester, NY. He began his college journey at Iona University in New Rochelle and is now a student at Fordham University’s Gabelli School of Business in the Bronx NY, majoring in Accounting and Finance. Nicholas has been actively involved in the crypto space since 2020, both on the investment side and in development, and continues to explore opportunities at the intersection of finance, technology, and digital assets.
