Trump's Tariffs Spark 4.2% S&P 500 Drop, Bitcoin Falls 8%

Bitcoin (BTC) and US stock markets experienced a significant sell-off following the announcement by US President Donald Trump of a list of reciprocal tariffs on several countries. This move sent shockwaves through financial markets, leading to a sharp decline in both Bitcoin and major US stock indices.

On April 3, the S&P 500 saw a 4.2% drop at market open, marking its most significant single-day decline since June 2020. The Dow Jones Industrial Average fell 3.41%, from 42,225.32 to 40,785.41, while the Nasdaq Composite dropped 5.23%. Overall, $1.6 trillion in value was wiped out from US stocks at the market open. These steep declines were driven by uncertainty surrounding the new tariffs and amplified investors’ concerns about an impending recession.

Bitcoin’s value dropped by 8%, but bulls seemed capable of defending the $80,000 support level. The total crypto market dropped 6.8% over the past 24 hours, making a relief rally in the short-term seem unlikely. The market turmoil led to a surge in crypto liquidations, with more than 200,000 traders being liquidated and the total amount exceeding $573.4 million. The largest liquidation occurred on Binance, with an ETH/USDT position worth $11.97 million being force closed.

Bitcoin’s open interest dropped below $50 billion, reducing market leverage. Joao Wedson, CEO of Alphractal, noted that the liquidation heatmaps indicate heavy leverage around $80,000, raising the potential for a drop to $64K-$65K if Bitcoin breaks this level with high trading volume. This analysis suggests that the market is highly sensitive to further downward movements, and traders should be cautious about the potential for additional declines.

In summary, the announcement of reciprocal tariffs by the US President led to a significant sell-off in both Bitcoin and US stock markets. The uncertainty surrounding the new tariffs and concerns about a potential recession drove these declines. While Bitcoin bulls managed to defend the $80,000 support level, the overall market sentiment remains bearish, with a relief rally in the short-term seeming unlikely. The surge in crypto liquidations and the reduction in market leverage further highlight the market's sensitivity to downward movements. Traders should closely monitor the situation and conduct their own research before making any investment decisions.