Bitcoin News Today: Crypto Market Plunges 5.87% as Trump Tariffs and Fed Policy Spur Sell-Off

Global investor concerns have escalated as a confluence of macroeconomic policy shifts and geopolitical tensions triggered a sharp sell-off across the cryptocurrency market on August 1. Major cryptocurrencies, including Bitcoin (BTC) and Ethereum (ETH), fell by over 2% and 3.6%, respectively, with altcoins like Solana (SOL), Cardano (ADA), and Dogecoin (DOGE) suffering losses of up to 5.87%. The Altcoin Season Index dropped to 35, signaling a return of market strength to Bitcoin amid heightened risk aversion [1]. A daily liquidation of $631.98 million in long positions further highlighted the market’s vulnerability to sudden downturns [1].

The sell-off was fueled by a combination of macroeconomic and geopolitical factors. The U.S. Federal Reserve’s decision to hold interest rates, coupled with warnings of potential economic stagnation, weakened risk appetite and led to liquidity withdrawal across digital assets. The market initially responded positively to regulatory clarity from the White House, but the broader bearish sentiment quickly overshadowed those gains [1]. Donald Trump’s proposed aggressive tariff regime, which threatens 60 countries with tariffs ranging from 10% to 50%, intensified investor anxiety. The resulting capital flight particularly impacted altcoins, with Ethereum and Bitcoin experiencing long liquidations of $168.9 million and $144 million, respectively [3]. These developments have led to broader reevaluation of digital assets as an investment class, especially as rising interest rates continue to pressure risk assets [1].

Stablecoins, often perceived as a safer alternative within the crypto space, also remain under scrutiny. Despite new regulatory measures, 43% of CFOs cite price volatility as their top concern in crypto investments, followed by accounting and control challenges at 42% [2]. Analysts warn that stablecoins are still vulnerable to de-pegging risks and could trigger a “bank run” scenario if investor confidence falters [6]. These concerns persist despite the introduction of new stablecoin laws, which have not fully addressed the inherent risks associated with dollar-backed crypto assets [6].

The impact of the crypto sell-off extended beyond digital assets, affecting traditional equity indices as well. The Dow Jones fell 0.19% amid tariff-related uncertainty, while the Nasdaq continued to climb to record highs, showcasing the uneven response of different asset classes to macroeconomic and geopolitical pressures [4]. This interconnectedness underscores how shifts in policy and global trade dynamics can rapidly influence investor behavior across markets.

Meanwhile, corporate actions in the crypto space have further heightened skepticism. American Eagle Acquisition Co. (AEHL) shares dropped 40.71% after the company announced a pivot toward a Bitcoin acquisition strategy. The sharp decline reflects investor wariness of rapid and speculative transitions in crypto-linked equities [9].

Regulatory developments also continue to shape the landscape. The SEC has emphasized its role in maintaining U.S. leadership in digital finance, though recent policies have altered the availability of crypto assets in ways that may limit investor access [7]. Critics of the proposed GENIUS Act have warned that the bill could replicate the systemic risks seen during the 2008 financial crisis, particularly due to potential loopholes in stablecoin regulation [10].

Taken together, the crypto market is navigating a period of intense volatility, influenced by shifting monetary policies, geopolitical uncertainties, and evolving regulatory frameworks. As investors recalibrate their exposure to digital assets, the path forward will likely depend on greater clarity in both macroeconomic and regulatory environments.

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Source: [1] Powell's Hawkish Stance Triggers Crypto Turbulence Amid... (https://dexalot.com/en/blog/powells-hawkish-statement-crypto-market-reaction)

[2] Despite Their Name, Stablecoins Remain a Risky... (https://www.aol.com/despite-name-stablecoins-remain-risky-073000649.html)

[3] Trump Tariffs: Crypto Market Crashes As Trade War... (https://coingape.com/trump-tariffs-crypto-market-crashes-as-trade-war-escalates-with-canada-and-other-nations/)

[4] Dow Jones Declines Amid Tariff Concerns (https://m.economictimes.com/crypto-news-today-live-31-jul-2025/liveblog/123004697.cms)

[6] The stablecoin law is here - It doesn't mean your dollar-... (https://www.morningstar.com/news/marketwatch/2025073038/the-stablecoin-law-is-here-it-doesnt-mean-your-dollar-backed-crypto-is-100-safe)

[7] SEC Chair Discusses American Leadership in Digital... (https://clsbluesky.law.columbia.edu/2025/08/01/sec-chair-discusses-american-leadership-in-digital-finance-project-crypto/?amp=1)

[9] AEHL Shares Plunge 40.71% as Bitcoin Shift Sparks... (https://www.ainvest.com/news/aehl-shares-plunge-40-71-bitcoin-shift-sparks-investor-doubt-2507/)

[10] GENIUS Act Could Spark 2008 Level Chaos, Critics Warn (https://www.techi.com/genius-act-crypto-stablecoin-crisis-warning/)