Trump’s latest tariffs are here, and Crypto market is collapsing. Can this economic shock push bitcoin into another free fall, or is it already the worst?
Trump doubles on tariff
The global financial markets are once again in turmoil, with US President Donald Trump’s latest tariff declaration, are sending shockwaves to stocks, goods and crypto.
US President on 27 February Announced A new 10% tariff on Chinese goods – at the top of the current 10% levy – with 25% duty on imports from Canada and Mexico. Investors reacted rapidly, killing the panic button, these measures deepened the uncertainty of the market.
Crypto market, already in stress, has experienced a sharp decline. As of 28 February, the total market cap has exceeded 8% in the last 24 hours, now sitting on $ 2.64 trillion – its $ 3.52 trillion at the beginning of the month is more than 25% from peak.
Bitcoin (BTC), market leader, has faced its biggest decline in months, which is about 8% to trade around 8% $ 80,000. At its lowest point, BTC touched $ 78,200 before staging a minor recovery.
AltCoins have performed even worse, many have seen the loss of double digits as traders raced to cash. For example, Ethereum (Eth), has fallen by about 10%, which is now about $ 2,150.
This sharp decline follows a pre -fears of tariffs on 3 February, which triggered a uniform sales. However, diplomatic talks provided temporary relief.
Mexico president Claudia Shinbam achieved 30-day stop at measures, allowing border security negotiations to continue, especially about American concerns on drug smuggling.
Canadian Prime Minister Justin Trudeau soon followed the suit. Trump was in a hurry to confirm that the tariff would be delayed as the two nations had worked to address these concerns.
But relief was short -lived. Trump’s latest comments on truth social suggests that he is dissatisfied, accusing both Mexico and Canada, failing to stop the flow of phentanels in the US.
With a rapid arrival of March 4, stress is once again at a boiling point, and tariff stagnation may be picked up soon.
For the Crypto market, it comes in a particularly delicate moment. Unlike previous cycles, where bitcoins and other digital assets traded extensively in isolation from traditional markets, the previous year has seen the growing correlation with comprehensive macroeconomic forces.
what happens next? If these tariffs are applied, how deep can the next market shock be? And already on the edge with the Crypto market, can we see another major shake-up in the coming days? Let’s break it.
How to set a chain reaction trade tariff in Crypto
Business war rarely occur. They wave in financial markets, move liquidity, reopen the expectations of inflation, and force central banks to re -order their policies.
If Trump applies an additional 10% levy on China with its tariffs on Mexico and Canada, the result can shut down a full -scale inflation shock, allowing the Federal Reserve to be placed in a difficult place and potentially deepens sales in crypto markets.
The main issue is that tariffs act as taxes on imported goods. When businesses face high costs on foreign products, they do not absorb loss – they pass them to consumers. This leads to an increase in the price of everyday goods to promote inflation from electronics to food.
The introduction of additional tariffs pushed it even more, with the introduction of about 3% in January with US inflation from the 2% target of the Fed, which pushed it even more, forcing the Fed to rethink its attitude on the rate cut.
Here is where Crypto market comes in the game. Bitcoin and digital assets historically thrive in a low atmosphere when additional liquidity invests. Increased inflation or dried-liquidity can trigger market shock.
In addition, from the mid -2023, bitcoin is trading more like a risk property than a inflation hedge, with it reaching a record high level from Nasdaq 100 and S&P 500.
When the stock markets tumble during the period of uncertainty, the cascading effect may reduce crypto speed.
As the inflation increases due to business tariffs and the fed protests to increase interest rates, liquidity may move forward because traders have a herd in US dollars.
The dollar, often seen as a “minimal risky risky property”, has recently strengthened its highest level against the Canadian dollar since recently, which reflects the widespread tendency of capital flight away from speculative assets.
We have already seen a preview of what happens when the liquidity dries. The flash crash of February eliminated about $ 760 billion in just 60 hours, with bitcoin sinking into the sink with other risk assets.
If the business tension triggers another layer of inflation pressure, we can reveal a similar landscape, investors participated for the protection of US dollars, gold and other defensive assets – to make bitcoin unsecured to another sharp decline.
How to react to retail and institutional investors
Market reaction to tariffs will not only hing on inflation; It will also be inspired by emotion and situation. Right now, bitcoins play an important role in the capital flow within the ETF Crypto market, and their behavior indicates that investors are already on the edge.
Since Trump’s choice, Bitcoin ETF has seen a record-breaking inflow, with $ 2 billion within just 48 hours. But that speed has moved.
Till 27 February, outsider has been dominated for eight consecutive business days, Total $ 3 billion, including a single-day record return of $ 1 billion on 25 February.
This pattern suggests that retail traders, who create an important part of the market, are going into herds, when the instability spikes comes out of the N Mass. The danger here is that tariffs can introduce a fresh catalyst for nervousness.
If inflation increases and the fed signals are delayed, we can see even more deep ETF outfits, making “air pockets” in the market where bitcoin experiences sudden and extreme value swings.
At the same time, institutional investors, who are increasing their risk to bitcoins through ETF, may begin to reconsider their allocation.
Hedge funds and asset managers entered the crypto space, expecting prolonged benefits, but they remain sensitive to macroeconomic conditions.
If the cost of capital is higher due to prolonged fed tightening, then risk-doubt returns for bitcoin may seem less attractive than other investments.
Therefore, a constant change in institutional emotion can accelerate the decline of bitcoin, strengthening a cycle of instability.
Also, what is different this time is the measure of the crypto market. During the final major trade war between the US and China in 2018, the total crypto market was around $ 300 billion.
Today, it is more than ten times the amount that is exposed to deep institutional participation and global financial flow. This means that any macro-powered jerk-site is the tariff, inflation spikes, or rate hike-has the ability to trigger more wider disruption than first.
Where does Crypto go from here?
The Crypto market finds itself at an intersection, caught between short -term terror and long -term conditions. Bitcoin looked at the level of fear and greed index, with a fall of 26% from its high and the last time during Luna Fall, Bhavna is extremely recession.
Analysts are divided, but a normal thread moves through their assessment: this recession cannot last long.
For example, Arthur Hayes predicts another sharp decline on the horizon. He warns that the market is creating low climb and before stabilizing “another violent wave below $ 80k”.
However, he also indicates to follow a quiet period, suggests that once it is finished, the market can enter a phase of relatives calm.
Julian Bittale, the head of macro research in Global Macro Investor, takes a more structural approach. He argues that the recession throughout the market, including the decline of bitcoin, has a direct result of tight financial conditions since the end of last year.
Nevertheless, Bitel sees this cycle reversing in advance. “Financial conditions are rapidly decreasing in the last two months,” he explains, citing falling bond yields, a weak dollar, and low oil prices, as the initial signs that are changing the tide.
With bitcoin now in RSI of 23 – the highest oversold level since August 2023 – Bitel suggests that the bends still recession “should not be very comfortable.”
Technical analysts are also looking at the potential divine points. Edward Moura noted that Bitcoin is close to the completion of a major CME breakout gap since last year.
While the market looks completely ruined, he argues that it is actually installed for a strong bounce. According to Mora’s data, about 90% of these intervals eventually fill, which would suggest a step back towards the $ 93,000 range.
Meanwhile, the Michael van de Popp focuses on the spirit, stating that the fear has reached a peak at a time when the US government is more supportive-crypto than ever before.
“I would say it’s going to reversed quickly,” he predicts, guessing that the below possibility is “one to two weeks away.”
While the market can be oversold, it does not mean that it may not be reduced. Although some indications point to a possible bounce, the comprehensive picture is uncertain.
If the liquidity continues to improve and inflation remains under control, a recovery may occur on the horizon. However, if the position of the macro deteriorates, it can be just another stop on the below way.
For now, traders should be cautious. Fear can be an adverse signal, but it may be risky to assume a reversed by closing the eye. The golden rule remains: you can lose more than the business wise and ever investing more.
