Trump Tariff Tsunami Threatens To Wash Away Bitcoin Bull Market, Commentator Warns

The crypto market is bracing for another storm as President Trump's tariff threats loom large, with Bitcoin's bull market potentially in the crosshairs. Global capital markets commentator The Kobeissi Letter warns that the trade war is back, and it could spell trouble for the crypto market, particularly Bitcoin.

On Thursday, Trump threatened a potential 25% tariff on the European Union, causing the S&P 500 to shed $500 billion in market cap. Bitcoin followed suit, briefly dipping below $84,000. The Kobeissi Letter notes that inflation expectations have surged from 2.7% to 4.3%, and tariffs could add $3,000 to car prices and raise food costs due to reliance on Mexican imports. The commentator highlights that while gold was up 10%, Bitcoin dropped 10%, diverging from its typical role as a hedge.

The Volatility Index (VIX) is rising, up 30% in the past two weeks, leading the commentator to conclude that "volatility is here to stay." This increased volatility in the broader market has also affected Bitcoin's price, as seen in the record wave of liquidations triggered by Trump's tariff announcement on Mexico and Canada.

Bitcoin ETF outflows have reached record levels over the past week, indicating that investors are pulling out capital from the crypto market. This can be attributed to several factors, including new tariffs and expectations surrounding macroeconomic data, which could be among the reasons investors are de-risking their portfolios.

The Kobeissi Letter highlights that crypto markets have erased $800 billion in valuation since trade war concerns began on Jan. 20. This decline in market capitalization can be attributed to the growing correlation between Bitcoin and risky assets, as investors seek safer havens during times of uncertainty.



The record outflows from Bitcoin ETFs can be seen as a sign of investor risk aversion, as they are pulling their capital out of the crypto market and potentially allocating it to safer assets, such as gold or government bonds. This trend can be seen as a reflection of the broader market dynamics, where investors are becoming more risk-averse in the face of macroeconomic uncertainty.

In conclusion, the crypto market, particularly Bitcoin, is facing a potential storm as President Trump's tariff threats loom large. The growing correlation between Bitcoin and risky assets, as well as the increasing volatility in the broader market, could spell trouble for the crypto market. Investors are pulling out capital from the crypto market, seeking safer havens during times of uncertainty. As the crypto market continues to mature and gain wider acceptance, its price movements are likely to become even more intertwined with broader market sentiment and macroeconomic data.