5 min readBitcoin has slumped 4% following Trump’s trade tariff announcement on Wednesday, which saw $200 billion wiped from the total crypto market capitalization amid heightened market volatility.
Trump’s unveiling of these tariffs sparked volatility in the crypto markets. Bitcoin fell from a high of $88,500 to a low of $ 82,300 on Wednesday, resulting in a $200 billion loss from the total cryptocurrency market cap. Ethereum trades 6% lower and Solana is down 12%. Meanwhile, Bitcoin alone saw $178.72 million in liquidations.
However, Bitcoin ETF saw inflows of $220.76 million on Liberation Day, snapping 3 3-day run of outflows titling $320 million. The inflow into Bitcoin ETFs coincided with Trump’s big tariff announcement, which some had believed might actually help Bitcoin in the long run.
Trump’s tariffs explained
President Trump announced a universal 10% tariff on Wednesday, the so-called Liberation Day, which will take effect on April 5. However, President Trump also applied additional tariffs on some countries. These, Trump said, were calculated at half the rate at which countries are currently charging the US.
China, the US claims, currently charges 67% tariffs; as a result, the US is applying a 34% tariff on goods coming from China. The European Union has been subject to a 20% tariff, while Japan has received a 24% tariff.
Total US tariffs on imports would be at 22%, compared to 2.5% last year, putting them at the highest level in over a century and higher than expected.
Recession risk rise
The move by Trump increases the chance of a global economic slowdown and a possible recession in the US. Tariffs present a severe risk to the US economy, which is already losing momentum. Prices are expected to rise, consumer and business confidence are expected to deteriorate further, and growth is expected to slow.
The chances of a recession in the US over the next 12 months are materially higher following Trump’s announcements.
Investors are selling not only crypto but also other risk assets, such as global equities, most notably in the US, where the tech-heavy Nasdaq 100 is down 3%. The US dollar has also dropped sharply, falling 1.5% against its major peers, falling to a level last seen in October last year.
Gold, on the other hand, has risen 19% so far this year, pushing above $3,100 per ounce as investors seek safe-haven protection from uncertainty. The Bitcoin–Gold divergence, combined with Bitcoin’s volatility and correlation with equities, raises questions about the “digital gold” narrative.
What now for Bitcoin?
The tariff situation remains very fluid. China has suggested they could retaliate as has the European Union. Should Trump’s tariffs spark retaliation, this could be the start of an escalating trade war. Tariffs at these levels is a concern for the macroeconomic outlook, which could continue to weigh on risk assets.
The outlook for risk assets, such as Bitcoin or stocks, could improve if Trump shows signs of backing down on some of these trade tariffs due to negotiations or if the Federal Reserve adopts a more accommodative approach to monetary policy.
Author
Risk DisclaimerThe financial products offered by the Company are complex and come with a high risk of losing money rapidly due to leverage. These products may not be suitable for all investors. Before engaging, you should consider whether you understand how these leveraged products work and whether you can afford the high risk of losing your money.
The Company does not accept clients from the Restricted Jurisdictions as indicated in our website/ T&C. Some services or products may not be available in your jurisdiction.
The applicable legal entity and its respective products and services depend on the client’s country of residence and the entity with which the client has established a contractual relationship during registration.
