The cryptocurrency market is undergoing a steep correction — and unlike previous downturns that left analysts guessing, this time the catalyst is unmistakable: Donald Trump’s sweeping global tariff announcement.
The Trade Policy That Sent Shockwaves Through Global Markets
In an unexpected move, the former president revealed a bold set of import tariffs, including a 10% flat rate on all incoming goods, and increased duties on Chinese imports, pushing total tariffs on some Chinese products above 50%.
The policy spurred immediate fears over rising inflation, supply chain instability, and a potential global economic slowdown. The response across international markets was swift:
- Japan’s Nikkei 225: down 2.77%, after falling as much as 4% intraday
- FTSE 100: down 1.5%
- Eurozone indices: down more than 2%
- S&P 500: opened -3.4%
- Nasdaq 100: plunged 4.1%
Crypto’s Correlation With Tech Takes a Toll
With its around-the-clock liquidity, the crypto market was among the first to react.
- Bitcoin (BTC) dropped from $88,466 to $82,182 — a nearly 7% pullback
- Ethereum (ETH): down 11%
- XRP: down 13%
- Solana (SOL): down 17.5%
The drawdown reflects crypto’s increasing correlation with risk-on technology stocks, particularly the Nasdaq.
How Trump’s Tariffs Could Reshape Crypto Dynamics
The longer-term effects of this policy shift are still unfolding. With global economies preparing for potential retaliatory trade measures, currency market volatility is on the rise.
The U.S. Dollar Index dropped to its lowest level since October 2023, and the dollar fell to a six-month low against the British pound.
According to CoinGecko:
“A weaker dollar historically boosts Bitcoin, which, like gold, is seen as a hedge against fiat currency instability.”
Still, such upside may take time to materialize. In the short term, market instability and risk aversion are likely to exert continued pressure on digital assets.
Investor Sentiment Sours as Recession Fears Mount
- Polymarket’s recession probability for 2025 rose to 53%
- CME FedWatch Tool shows May rate cut odds jumped from 10.6% to 27.3%
If the Federal Reserve initiates rate cuts, renewed liquidity could favor crypto. Until then, expect elevated volatility.
Will Bitcoin Defend $80K?
The immediate test for BTC is whether it can hold the $80,000 psychological support.
Despite worsening sentiment, prominent Bitcoin advocates like Michael Saylor and Samson Mow remain confident in BTC’s long-term value.
But with Q2 underway and risk-off sentiment dominating, the market may remain under pressure unless a bullish catalyst emerges.
