TLDR
- In a bold move, Trump introduced new tariffs, enforcing a minimum 10% on all exports and heftier rates for major trade allies.
- Once the news on tariffs broke, Bitcoin tumbled from $88,500 to roughly $83,500.
- Unpredictability surged in the market, resulting in $450 to $500 million in liquidations, impacting positions on both ends of the spectrum.
- Stock indexes in Asian markets took a nosedive, alongside US Treasury yields, which hit their lowest in months.
- Despite the initial turbulence, analysts believe that understanding the tariff's reach could boost market stability in the long run.
The announcement of wide-ranging tariffs by President Donald Trump led to steep drops in Bitcoin and other cryptocurrencies, shocking global financial arenas.
Under Trump's directive, a sweeping 10% tariff was applied to all US-exported goods, with major partners facing even steeper rates—China at a 50% increase, the EU at 20%, and Japan at 24%.
🚨 @POTUS Trump authorized a broad implementation of reciprocal tariffs affecting countries worldwide.
It's LIBERATION DAY in America! pic.twitter.com/p7UnfE617B
— Rapid Response 47 (@RapidResponse47) April 2, 2025
Bitcoin first showed hopeful signs, hitting $88,500, as investors expected manageable tariff impacts. However, clarity on the tariffs soon reversed this optimism.
Bitcoin swiftly plummeted to around $83,500, wiping out prior weekly gains, with Ethereum following suit, falling from $1,934 to $1,797.
Market Liquidations Mount
The sudden price movements Massive liquidations hit crypto futures, with data reporting $450 to $500 million in forced closures of both long and short orders within just a day.
Bitcoin futures alone witnessed over $172 million in liquidations, while Ethereum futures faced $120 million in sell-offs, with smaller altcoins adding another $50 million.
The turbulence affected close to 160,000 traders, with the largest single loss being an $11.97 million ETHUSDT contract on Binance.
Interestingly, the liquidations affected both bullish and bearish bets almost evenly. $257 million came from long positions, with another $232 million wiped from shorts.
Global Market Impact
Beyond crypto, Trump's tariff announcement wreaked havoc in Asian stock markets, as Thursday's early trading saw steep declines.
The US 10-year Treasury yields plummeted to historic lows not seen in over five months, while gold prices shattered records as it became the go-to safe haven for jittery investors.
The stock market felt the impact as well, with the S&P 500 reportedly losing over $2 trillion in value post-tariff news.
The crypto market capitalization saw a steep fall, shedding about $200 billion at its peak, as the Crypto Fear & Greed Index dropped to 25, signaling intense market fear.
Looking Forward
Despite the initial chaos, some experts believe clearly established tariffs could steer markets towards stability over time. Crypto investment expert David Hernandez from 21Shares commented on the possibility of markets finding confidence amid clearer policy outlines.
Hernandez pointed out, “Though tariffs exceeded expectations, the certainty they bring could be advantageous as the market hates ambiguity. With rampant speculation curtailed, institutional players might find undervalued opportunities.”
US Treasury Secretary Scott Bessent cautioned trading nations against responding with their own tariffs, describing the current rate hikes as 'at the upper limit,' unless retaliations lead to further duties.
Rachael Lucas, a crypto analyst at BTC Markets in Australia, remarked on the initial Bitcoin price jump as 'a breath of relief' before a quick sell-off, once full tariff implications were known.
Lucas explained how trading on BTC Markets surged 46%, with traders scrambling to react. While big players cashed in quickly, smaller traders showed hesitance amidst the turmoil.
Lucas warned of potential new rounds of panic selling if the EU or China retaliate strongly, as global reactions will determine market trends in the days ahead.
Ultimately, some see a silver lining despite the tumult. Optimistic forecasts predict Bitcoin reaching $200,000 or even $500,000 by 2025 if the US were to create a strategic Bitcoin reserve.
As it stands, the crypto market is processing the ramifications of Trump's tariff policies, with traders evaluating their strategies while anticipating actions from affected trade partners.
