Bitcoin Slumps as Trump's Tariffs Spark Market Turmoil

Bitcoin Slumps as Trump's Tariffs Spark Market Turmoil

Bitcoin prices plummeted on Wednesday, wiping out recent gains as U.S. President Donald Trump’s steep trade tariffs took effect, triggering widespread losses across financial markets. The cryptocurrency fell 3.5% to $77,128, nearing a six-month low, as risk appetite soured amid escalating trade tensions.

Global Trade War Fears Intensify

Trump’s tariffs, including a 104% levy on Chinese goods, drew swift retaliation from China, which raised its own tariffs on U.S. imports to 84%. The move heightened fears of a global trade war, with other European countries also preparing countermeasures. The uncertainty led to sharp declines in risk-driven assets, including cryptocurrencies.

Bitcoin's Technical Woes Add to Pressure

Bitcoin’s losses were compounded by the formation of a death cross, a bearish technical indicator, earlier this week. The cryptocurrency also failed to hold onto a brief rebound from recent lows, further rattling investor sentiment.

Broader Crypto Market Suffers

The sell-off extended to other cryptocurrencies, with Ether dropping 5% to a two-year low of $1,482.80, while XRP, Solana, and Cardano also saw significant declines. Meme tokens like Dogecoin and $TRUMP also slid, reflecting the broad-based risk aversion.

Saylor's Strategy Reports Major Loss

Major Bitcoin holder Strategy (NASDAQ:MSTR) disclosed a $5.91 billion unrealized loss on its digital asset holdings, further weighing on sentiment. The loss, tied to changes in accounting standards, contributed to a sharp decline in Strategy’s shares this week.

Expert Insights: A Healthy Correction?

Despite the downturn, some market participants view the drop as a healthy correction within a longer-term uptrend. Pat Zhang of WOO X noted that Bitcoin remains well above its 2022 bear market low, with even a correction to $50,000 reflecting a 200% gain from those lows. Many long-term investors continue to see pullbacks as buying opportunities, highlighting Bitcoin’s cyclical nature.

The crypto market’s recent volatility underscores the delicate balance between macroeconomic uncertainty and long-term investor confidence. As trade tensions escalate, Bitcoin and other cryptocurrencies may face further headwinds, but some remain optimistic about their resilience.