Bitcoin Plummets 6% as Trade Tensions Spark Market Rout

Bitcoin's price experienced a significant decline, reaching a three-week low on Sunday. This drop coincided with a sharp decrease in U.S. equity futures, as investors reacted to the latest escalation in trade tensions. The cryptocurrency's value plummeted by more than 6% within a 24-hour period, settling at $77,700. This decline marked a notable shift from its previous stability, which had led some to believe that Bitcoin might be decoupling from traditional market movements. The sudden drop in Bitcoin's price was part of a broader market downturn, with equity futures pointing to further losses ahead. The tech-heavy Nasdaq-100 contracts led the declines, falling by more than 4.6% as trading reopened on Sunday night. This rout in futures suggested that the cash index was on pace to fall more than 20% from its February record, indicating a potential bear market. The market's volatility was exacerbated by the escalating trade tensions, which added to the uncertainty and risk aversion among investors. The decline in Bitcoin's price highlighted the cryptocurrency's sensitivity to broader market conditions, despite previous claims that it could serve as a safe haven asset. The sharp drop in Bitcoin's value, along with the broader market sell-off, underscored the interconnectedness of global financial markets and the impact of geopolitical events on investor sentiment.

The sell-off follows Trump’s sweeping new tariffs on major U.S. trading partners, which came into effect on Saturday, reigniting fears of a prolonged trade war and global economic slowdown. Those measures include a universal 10% tariff on nearly all imported goods, with significantly higher reciprocal tariffs targeting specific countries. Imports from China are subject to a 34% tariff, while those from the European Union face a 20% tariff. The country-specific tariffs are designed to mirror the perceived trade barriers that these nations impose on U.S. exports. As a result, the crypto market, which had remained relatively calm over the weekend, began to slide in tandem with the CME futures open.

“There was chatter that Wall Street banks called their traders back to their desks before 5 a.m. HKT this morning ahead of CME futures opening,” Peter Chung, head of research at Singapore-based algorithmic crypto trading firm Presto, told Decrypt. “Tension was in the air for something big to go down.” While it remains unclear how the rest of the week will play out, Chung said there are scenarios that could reverse the current risk-off sentiment. “There’s been chatter that not everyone in the White House is on board with the pace of the tariff implementations,” he said. “If Trump backs down or the Fed responds with dovish comments or hints at emergency intervention, things could quickly turn around.”

Pratik Kala, head of research at Apollo Crypto, told Decrypt the market may be entering a phase of heightened uncertainty with “history book implications.” “This can be a prolonged trade war,” Kala said. “That being said, in my opinion, Trump is following The Art of the Deal playbook.” Referencing the president’s best-known business book, Kala pointed to two of its central principles—“make them need you” and “protect the downside”—to suggest that Trump may be angling for leverage ahead of potential negotiations. “Protecting the downside is easy,” Kala said. “One tweet away.” While cautioning that volatility is likely to remain elevated, Kala said the pullback could offer re-entry opportunities for traders willing to take on risk. “This is a good spot to start dabbling in again in small size and with caution,” he said. “We should see some deals and negotiations take place soon.” Kala added that the biggest unknown remains the European Union, which has yet to formally respond. “If they come back with something aggressive, we’re in for another leg down.” Still, he noted, many investors are “eagerly waiting for the dust to settle to buy back, as these opportunities come rarely.”