Bitcoin Falls 50% From All-Time High Amid Tariff Reinstatements

Bitcoin has experienced its first significant correction since the April lows, retreating from a 50 percent surge that took it from $74,501 to a new All-Time High of $111,880. This pullback comes after nearly 50 days of continuous upward momentum with minimal retracements. The correction is not merely technical; it is influenced by renewed macroeconomic pressures following the unexpected reinstatement of tariffs by the US government. This has led to a surge in 30-year Treasury yields above 5 percent and a wave of risk-off sentiment. Additionally, Bitcoin’s derivatives markets are showing signs of overheating, with options open interest reaching an All-Time High of $49.4 billion. This indicates elevated institutional activity and increased hedging/speculation following the recent Bitcoin ATH. Such positioning suggests that the market is anticipating heightened volatility ahead, with expectations of further macro headwinds and structural profit-taking. On-chain metrics support this view, as the Relative Unrealised Profit indicator has broken above its +2 standard deviation band, a historically euphoric zone that typically precedes sharp intraday swings and local tops.

Despite the pullback, Bitcoin remains structurally strong. This correction appears to be a healthy reset rather than a breakdown, driven by leverage flushing and profit realization after one of the sharpest recoveries in crypto history. In contrast, the US economy is showing signs of strain as consumers and businesses navigate a landscape marked by trade tensions, cooling demand, and policy uncertainty. Consumer spending slowed significantly in April, with households favoring savings over discretionary purchases amid growing concerns about the long-term effects of tariffs. While inflation remains subdued for now, this may be temporary as businesses begin to pass on higher costs from elevated tariffs.

Trade dynamics have also shifted sharply. Imports fell nearly 20 percent in April after a front-loading rush to beat tariff hikes in the first quarter, which in turn caused the goods trade deficit to shrink by 46 percent. Although this narrowing trade gap could support GDP in the short term, business inventories remained flat, signaling hesitation to invest or restock. In parallel, orders for core capital goods—an indicator of business investment—dropped 1.3 percent, the steepest decline since October, pointing to growing corporate caution. The labor market is also showing early signs of stress, with continuing jobless claims hitting their highest level since 2021 and firms increasingly freezing hiring plans. Corporate profits fell sharply in Q1, and sentiment among business leaders has weakened. Even with a temporary trade truce, confidence remains fragile. While consumer sentiment rebounded in May, underpinned by hopes of tariff relief, both businesses and households are adopting a cautious, wait-and-see approach.

The cryptocurrency industry has seen a wave of significant developments across corporate, regulatory, and global financial sectors. GameStop, the well-known meme-stock, made headlines with a bold $513 million investment in Bitcoin, marking a strategic shift toward financial diversification amid declining sales. This move aligns the company with a growing list of firms integrating Bitcoin into their treasury strategies, though it also sparked investor unease over crypto market volatility and the company’s limited experience in managing digital assets. Meanwhile, the US Department of Labor rescinded its 2022 guidance that discouraged the inclusion of cryptocurrencies in 401(k) retirement plans, signaling a more neutral stance. This change allows fiduciaries greater flexibility to evaluate crypto investments for retirement portfolios, reflecting the digital asset market’s growing maturity and improved regulatory clarity. On the global stage, the Bank of Russia authorized financial institutions to offer crypto-linked financial instruments to qualified investors. Although these products are non-deliverable and tightly regulated, the decision marks a cautious yet significant step toward integrating digital assets into Russia’s financial system. Collectively, these developments underscore a broader trend: cryptocurrencies are moving from the fringes into mainstream financial systems, prompting innovation while raising the stakes for sound regulation and risk management.