Bitcoin dropped sharply after US President Donald Trump announced hefty tariffs, which caused fear in financial markets. When blanket tariffs were suddenly implemented, risky assets like Bitcoin, which is often seen as a high risk investment fell very hard. Before the news, the cryptocurrency’s price hit an all-time high of nearly $88,000 during the day. It then fell to almost $81,300.
Tariffs Trigger Market-Wide Panic
Trump caused market confusion when he announced a 10% tariff on all countries. He did this by using the International Emergency Economic Powers Act of 1977. Following the announcement of more targeted tariffs on countries with large trade surpluses with the U.S., such as China, set to begin on April 9, the move went into effect on April 5. Many people were surprised that the announcement came after the U.S. stock market closed. Many experts think this was done on purpose to avoid an immediate crash in the stock market.
Bitcoin and Equities Suffer Sharp Losses
As expected, things went badly very quickly. Bitcoin steadily increased until it dropped over 7% in just a few hours. It went back up for a short time to about $83,000, but it was still a long way below its previous high. Major U.S. stock markets also took a beating at the same time. The Nasdaq Composite lost about 6%, and the S&P 500 lost 4.8% in one day. The market analysts said that because cryptocurrency trading happens constantly, Bitcoin was especially vulnerable to the overnight announcement. This contrasted stocks, which were safe until the next trading day.
Investors Give Up on Risky Assets
The market quickly became defensive. Analysts noticed that Bitcoin is still seen as a risk on asset, meaning its value drops when there is less confidence in the economy. Fearing a slowdown in global growth and a possible recession investors avoided risky investments like crypto and tech stocks.
Conclusion
Bitcoin’s sharp drop shows its vulnerability to political and economic changes. Some experts say that technical levels and the mood of the market play a role, but the general agreement is that global policy decisions, especially those that affect trade, have a big impact on Bitcoin’s path.
