With $1.4 billion in crypto liquidations in a single day and trillions wiped off global markets, investors are asking: Have we hit bottom — or is this just the beginning of something worse?
Tariffs Trigger Global Market Shockwaves
On April 2, former U.S. President Donald Trump announced sweeping tariffs under the banner of “Liberation Day,” instantly rattling global markets.
- Canada and Mexico: 25% tariffs
- China: Additional 34% on top of existing duties
- Combined effect: Some imports now taxed over 54%
The result? Global asset sell-offs.
Within 48 hours:
- $5.5 trillion was erased from U.S. markets
- The S&P 500 dropped 10%
- The Dow Jones lost 4,000+ points (9.5%)
- The Nasdaq plunged 11%
On April 4, China hit back with retaliatory tariffs of its own, compounding the fear and uncertainty.
The VIX, Wall Street’s fear gauge, surged to 60, a level not seen since the COVID-19 crash and the 2008 financial crisis.
Crypto Tanks Alongside Traditional Assets
As panic spread, the crypto market followed. In the 24 hours leading to April 7:
- $1.4 billion in crypto liquidations (CoinGlass)
- Bitcoin fell 8%, touching $74,400
- Ethereum crashed 17%, briefly dipping to $1,415
- Solana slid to around $101
- XRP dropped 16% to $1.76
Despite Bitcoin’s reputation as “digital gold,” the data shows it still behaves like a risk asset during market turmoil — mirroring tech stocks, not bucking the trend.
Why Tariffs Hurt Crypto (and Everything Else)
Tariffs mean:
- Higher import prices → more inflation
- More inflation → delayed Fed rate cuts
- Delayed cuts → lower liquidity
- Lower liquidity = bad for crypto and growth stocks
Trump’s policy shift has upended the economic outlook. The Federal Reserve now faces a dilemma: fight inflation, or rescue markets? Rate cut expectations for May jumped from 10.6% to 27.3% within days.
Capitulation or Correction? Signs of a Market Breakdown
Institutional behavior has flipped from caution to full-blown fear:
- Gold (a traditional safe haven) briefly dropped below $3,000/oz
- Hedge funds and asset managers are pulling money out of stocks and crypto
- Capital is moving into cash and defensive assets instead
“The market has lost its orderly nature,” wrote The Kobeissi Letter, noting that broad-based selling often signals a capitulation phase, where preservation of capital trumps strategy.
How Bad Can It Get? Experts Weigh In
If retaliatory tariffs continue, we could see:
- Global trade shrink to 2008 crisis levels (Oxford Economics)
- $1.8 trillion tax impact on U.S. consumers (Tax Foundation)
- Imports cut by $900B, raising prices across sectors
The U.S. may hit Smoot-Hawley-era tariffs (33%+), a level not seen since pre-WWII.
Industries like tech, retail, and manufacturing are already under pressure:
- Apple and Nike lost $470B combined in value
- Boeing shares dropped 10% on supply chain fears
JPMorgan warns that a 2025 recession is on the table if trade wars escalate.
What’s Next for Bitcoin and Crypto?
There’s no sugarcoating the short-term outlook: volatility will likely continue. But some experts are turning to the long-term case for Bitcoin.
Jamie Coutts (ex-Bloomberg strategist):
“Bitcoin is becoming a macro hedge — a way for institutions to express fears around trade war risks and deglobalization.”
BlackRock’s View:
Acknowledged Bitcoin as a:
“Scarce, decentralized, non-sovereign asset with hedging value.”
Michaël van de Poppe:
“Expect more panic. $70K is a possible support. But these may be long-term buying zones.”
Geoffrey Kendrick (Standard Chartered):
“U.S. isolationism increases fiat risk, which ultimately benefits Bitcoin.”
He flagged $76,500 as a key level to watch — the high from the post-election rally.
While panic-driven sell-offs are dominating headlines, analysts suggest that Bitcoin may be quietly evolving into a geopolitical hedge. But until volatility stabilizes and macro clarity returns, extreme caution is warranted.
Never invest more than you can afford to lose. The road ahead could be rocky — but opportunities may emerge once the dust settles.
