Bitcoin breaks $80,000, Xi Jinping's Taiwan warning threatens even the final support line of $78,000?

▲ Trump, Xi Jinping and Bitcoin/ChatGPT generated image ©

As Bitcoin (BTC) sharply dropped, breaking the $80,000 support level, higher-than-expected inflation shocks and a sharp war of nerves between the US and Chinese leaders over Taiwan have rapidly frozen global investment sentiment.

According to investment media FXStreet on May 14 (local time), Bitcoin (BTC) fell by 2.3% from the previous day to $79,200 during Asian trading hours, breaking the $80,000 floor it had maintained for the past week. This was a direct result of the risky asset market's immediate reaction to a direct warning from Chinese President Xi Jinping during his Beijing summit with US President Donald Trump, where Xi stated, "The Taiwan issue is the most important matter in China-US relations, and if mishandled, the two countries could clash or fall into a dangerous situation." In response, Taiwan's Ministry of Foreign Affairs countered that Beijing is the sole threat to regional peace, and these geopolitical tensions accelerated the downward pressure on the virtual asset market.

Economic indicators also acted as negative factors. Following the Consumer Price Index (CPI) announced last Tuesday, which hit 3.8%, a three-year high, the Producer Price Index (PPI) announced on Wednesday also surged 1.4% month-over-month, nearly tripling market expectations of 0.5%. Consecutive inflation shocks dampened expectations for interest rate cuts by the Federal Reserve (Fed), leading to the disappearance of the structural tailwind of liquidity easing that the virtual asset market had previously priced in.

In the altcoin market, Solana (SOL) led the decline, plummeting 5.6% to $90. Ethereum fell 2.1% to $2,250, marking its second-lowest weekly return, and XRP (Ripple) also couldn't escape weakness, trading down 1.7% at $1.43. In contrast, Dogecoin showed a unique upward trend, being the only major coin to rise, gaining 0.9% to $0.1126.

Volatility in the overall financial markets also increased. Asian stock markets fluctuated due to the friction from the US-China summit, and mainland Chinese stocks fell by 1.3%. However, not all assets collapsed. Cisco Systems surged 20% after announcing strong earnings forecasts, and artificial intelligence (AI)-related tech stocks maintained robust buying momentum, continuing a differentiated trend amidst the mixed market.

The future direction of Bitcoin depends on whether it can defend the $78,000 support level, which was its low point in early May. Experts warn that if this level breaks, further corrections down to the sharp decline zone of last April could occur. Conversely, if the $78,000 level is maintained, structural buying forces are expected to defend the market and look for rebound opportunities before the final outcome of the US-China summit and the next macro indicator announcements.

*Disclaimer: This article is for investment reference only and does not take responsibility for investment losses based on it. The content should be interpreted for informational purposes only.*