Bitcoin Faces Volatility After Trump Tariff Announcement

Bitcoin (BTC) is facing significant volatility following U.S. President Donald Trump's recent announcement of reciprocal trade tariffs that could potentially send the cryptocurrency's price tumbling to $71,000. On April 2, 2025, Trump unveiled new tariffs on imports from over 50 countries, including members of the BRICS and the European Union, as part of what he called a "Declaration of Economic Independence." The immediate impact on the crypto market was stark, with Bitcoin reacting more severely than traditional stocks, falling by 8.5% in a single day, while the S&P 500 managed to close 0.7% higher.

According to Charles Edwards, founder of Capriole Investments, the market is experiencing “very high risk” conditions. He noted that the Philadelphia Fed’s Business Outlook Survey (BOS) has dropped below 15 for the first time since early 2024, a sign that echoes similar downturns in 2000, 2008, and 2022. Edwards remarked, "Consider this as tariffs come in higher than expected. The Philly Fed Business Outlook survey is showing expectations today comparable to 2000, 2008 and 2022." This data suggests that investor confidence is wavering, as the tariffs are shaking the market.

Bitcoin's price, which peaked at $110,000 during Trump's inauguration, fell to around $83,666 following the tariff announcement. The cryptocurrency initially dipped from $88,000 to $85,000—a $3,000 drop in just ten minutes—before stabilizing at approximately $84,800. Ethereum (ETH) also suffered, sliding to $1,845 as the overall crypto market took a significant hit.

Edwards pointed out that the key level to watch for Bitcoin is $91,000; a daily close above this figure would signal a strong bullish reclaim. Conversely, if Bitcoin continues to decline, it may dip into the $71,000 zone, where a sizable bounce could occur. He stated, "While no guarantee of the future outlook this metric does have false signals, this is a data reading we have had before at very high risk zones."

The tariffs, which include a 27% discounted reciprocal tariff on imports from India, have led to a broader panic in the market. Zack Burks, CEO of NFT company Mintology, described Trump's speech as an "atomic bomb" for current markets, indicating that cryptocurrencies are not safe in the immediate term. The crypto community had anticipated some mention of digital assets in Trump's address, especially given his previous promises to foster a crypto-friendly environment in the U.S. However, his omission of any reference to Bitcoin or blockchain left many traders unsettled.

As the market reacted to the tariffs, the total cryptocurrency market capitalization plummeted by over $140 billion, with Bitcoin alone seeing liquidations of more than $178 million. The volatility has extended to altcoins, with Ethereum and Solana (SOL) experiencing declines of over 4% and 8%, respectively. Other major cryptocurrencies, including XRP and ADA, also faced notable losses.

Despite this turmoil, some institutional investors are seizing the opportunity to buy the dip. Data from Coinglass indicates that Bitcoin spot ETFs recorded inflows of $218 million, breaking a streak of outflows. This suggests that while retail investors may be panicking, larger players are cautiously optimistic about Bitcoin's long-term potential.

Looking ahead, analysts are closely monitoring the U.S. Federal Reserve's monetary policy. The Fed has begun to loosen its tight financial policies, raising speculation about a return to quantitative easing (QE). Edwards queried, "How long until the Powell printer starts humming?" An influx in the M2 money supply has historically correlated with price surges in Bitcoin, which could provide a silver lining amid the current bearish sentiment.

In summary, the next few weeks will be crucial for Bitcoin. If it can reclaim the $91,000 level, it may signal a recovery. However, if the cryptocurrency fails to hold above key support levels, further downside pressure could ensue. With market uncertainty at its highest since the early 2000s, traders should prepare for heightened volatility.

As the situation evolves, Bitcoin traders are advised to stay vigilant, keeping an eye on U.S. economic developments and potential policy changes that could impact the cryptocurrency landscape. The implications of Trump's tariffs and the Fed's monetary policy will likely be pivotal in determining Bitcoin's next significant move.