Bitcoin Plunges 12% Amid Trump Tariff Chaos and ETF Outflows

This week, the financial markets experienced significant volatility due to the fluctuating trade tariff policies announced by President Donald Trump. This uncertainty had a ripple effect on various assets, including Bitcoin, which is often considered a risk asset. Over the past seven days, Bitcoin's price has fluctuated between $94,770 and $82,681, currently trading at $85,925 after a slight increase of less than 1% over the past week.

Bitcoin's price movements were closely tied to the broader market sentiment, particularly the performance of the S&P 500, which had its worst week in months. The cryptocurrency saw sharp declines on Monday and Tuesday following a surge on Sunday, prompted by Trump's posts about crypto reserves. The price fell again on Thursday after Trump formally announced the creation of a Bitcoin reserve and accompanying crypto stockpile. Traders may have sold off their holdings late Thursday following extensive speculation around the reserve plans, as Bitcoin's price remains correlated with volatile U.S. equities during times of macroeconomic uncertainty.

President Trump's announcements on the amount and timing of tariffs on trading partners added to the market's uncertainty. This volatility led American investors to pull money out of the new Bitcoin ETFs, with Friday being the worst day of the week, seeing $409 million in outflows, bringing the week's losses to $740 million. While this week's outflows were significant, they were not as severe as the previous week, when Bitcoin ETFs experienced their worst day on record. The market's instability has made it difficult to predict when investors will regain their enthusiasm for these funds.

On Thursday, President Trump signed an order to establish a Bitcoin strategic reserve, fulfilling a campaign promise. This reserve will hold the nearly 200,000 Bitcoin that the U.S. government already possesses from seizures. The order also includes plans to develop strategies for acquiring additional government Bitcoin in a budget-neutral manner. This news followed a controversial announcement by Trump on Sunday, where he suggested that the government would hold other cryptocurrencies as well. However, it was later clarified that these altcoins would be held in a separate stockpile.

White House Crypto Czar David Sacks clarified that the Trump administration is not currently planning to sell off reserve government assets like gold to buy more Bitcoin. However, he indicated that discussions are underway