Bitcoin Price Drops As Trump Enforces New Trade Tariffs
Bitcoin Price drops after US President Donald Trump has again managed to shake financial markets, including the cryptocurrency one. On April 2, the world’s largest cryptocurrency, Bitcoin, suffered a massive hit as Trump announced additional tariffs on all goods imported into the United States, starting on April 5. This unexpected move added fuel to ongoing concerns in the Trump Bitcoin narrative, reinforcing the connection between political turbulence and digital assets.
This is the second major tariff announcement this year, which is escalating worries over the trade war between the US and its closest trading partners – Canada and the European Union. China has also received the second helping of import tariffs from Trump. This news triggered panic sales in financial markets. And as stocks have begun to tumble, Bitcoin followed suit alongside them as investors have rushed into the safe-haven asset, which has been popular for much more than stocks and crypto put together – gold.
Bitcoin plunges following the stock market
Bitcoin has frequently been shilled by top influencers as a hedge against inflation and market uncertainty. However, the recent developments show that the leading cryptocurrency is closely correlated with conventional financial markets. Bitcoin drop showed an enormous crash, following the plunge of major US stock indexes, including the Nasdaq 100. Along with that, Dow Jones fell by roughly 1,100 points, the S&P 500 went sharply down as well. Bitcoin, which had surpassed $88,000 this week, plummeted by 6.8% on Monday, reaching $81,860. After that, another plunge took place following a feeble attempt to recover. Overall, within the past two days, Trump’s announcement has pushed BTC down nearly 8%, and it is now trading slightly under $82,000.
Market analysts have stressed that the new tariffs are triggering investor uncertainty as to how these measures will influence global trade and undermine economic stability. The new tariffs impose a minimum 10% fee on all imports entering the US from Canada and steeper rates from China and the European Union. Both consumers and businesses have been disturbed about this as the markets have seen a surge of risk-off sentiment, which means investors are rushing to sell risky and volatile assets, including equities and Bitcoin, shifting into safe-haven assets.
This week, major on-chain data crypto company Glassnode revealed an additional driver for the recent Bitcoin decline, which began even before the new round of tariffs – short-term holders started selling BTC after the recent price $109,000 all-time high to take profits off the table. Those who held longer were afraid of the recent economic developments and began selling too. The markets have been shaking since the beginning of March when Trump imposed the first round of trade tariffs on Canada, Mexico, and China. In both cases, these countries responded with similar measures, trying to soften the blow for their economies.
Gold reaches new ATH amid Bitcoin sell-off
However, long-term holders, who bought Bitcoin between 2020 and 2023, have proved to be quite resilient. Despite huge unrealized profit, those who bought BTC below $4,000 in 2020 continue to hold, patient to see highs much bigger than $109,000 on January 20.
In the meantime, while Bitcoin is suffering a substantial price decline, its physical rival, gold, has reaffirmed its role as a safe haven asset. On April 1, gold showed a spike to a new historic price peak, reaching $3,148.96 per ounce. Gold has attracted a new wave of investors amid economic instability and tit-for-tat measures from Canada, China, and this time, also Europe. Gold’s market cap has reached a record $20.930 trillion, adding more than $10 trillion over the past few years of global economic instability. Bitcoin so far boasts only $1.6 trillion, falling far behind gold.
For many decades, investors have viewed gold as a solid store of value during times of uncertainty and turmoil. Now, as the global economy still has inflation hanging above it, demand for gold has rapidly rocketed. Bitcoin itself, despite having a nickname “digital gold,” cannot compete with physical gold here fully, as markets show.
Another likely BTC sell-off trigger – Elon Musk
The market turmoil intensified when Politico media outlet announced that Elon Musk was to be dismissed from his role in the US Department of Government Efficiency (D.O.G.E) by President Trump soon. Reportedly, concerns about his influence in political circles began to grow. Besides, Tesla was suffering damages from vandalism of some of its offices and trading outlets. Besides, unknown groups have been setting Tesla cars on fire in the US. Musk addressed those acts of vandalism on the American TV recently, bashing them as acts of terrorism against him. He also revealed that he has been receiving a great number of death threats.
Musk is a well-known supporter of crypto in general and Bitcoin and Dogecoin in particular, hence the abbreviation D.O.G.E. He recently stated, though, that the US government has no plans to put Dogecoin to any use.
On Wednesday, Musk dismissed the rumour about his upcoming resignation, calling it fake news.
Besides, now Bitcoin traders are watching every movement of the Federal Reserve. If it drops as much as a hint on future rate cuts this year, the BTC price may well catch the second wind and begin to recover.
