Trump’s tariff war is back—and it’s tearing through the $3.7 trillion crypto market.
Broad new import duties—10% on all goods, up to 54% on Chinese imports—have ignited a macro sell-off that’s pulled Bitcoin, Ethereum, and crypto stocks sharply lower. Bitcoin now trades at $113,231, down nearly 6% on the week. Shares of Coinbase (-16%) and Circle (-8.4%) are under heavy pressure.
The market reaction has been swift and severe. The Nasdaq just posted its worst single-day drop since 2020. The VIX, Wall Street’s fear gauge, spiked above 40—territory not seen since the last debt ceiling crisis.
Crypto, long pitched as an alternative to fiat-driven chaos, is being pulled down with the rest of the risk complex. Once again, Bitcoin’s safe-haven thesis is on trial.
A Macro Shock Hits Digital Assets
The tariff escalation began in February, when the White House imposed 10% duties on Chinese goods and 25% on Canadian and Mexican imports. That triggered a rapid 8% drop in total crypto market cap. Bitcoin slid from $105,000 to $96,000 in days.
The second wave hit on April 2, as “Liberation Day” tariffs rolled out: a 10% baseline on all imports, with higher rates for targeted countries. Bitcoin dropped to $82,000 and Ethereum briefly fell under $1,800. More than $450 million in crypto futures were liquidated within 24 hours.
“Uncertainty and instability in global trade always ripple into crypto markets,” said Jeff Feng, co-founder of Sei Labs and a former Goldman Sachs banker. “Bitcoin has not quite lived up to the volatility hedge it was meant to be.”
Flight from Risk, or Failure of Narrative?
Crypto’s correlation with equities remains stubbornly high. As investors flee risk assets, crypto is being sold alongside tech stocks—despite its theoretical decoupling from traditional systems.
“Trump’s tariff tantrum is rattling global markets—and crypto is catching the fallout,” said Mike Cahill, CEO of Douro Labs. “Investors are scrambling to de-risk.”
Still, not all observers see this as a failure. MicroStrategy Chair Michael Saylor argues the opposite: that the chaos proves crypto’s necessity. “There are no tariffs on Bitcoin,” he said.
Others agree the current drawdown reflects short-term positioning, not long-term fundamentals. Bitcoin’s historical behavior in macro stress events shows it tends to recover quickly, according to Alice Liu, Head of Research at CoinMarketCap, noting what we’re seeing is more structural than sentimental.
Stablecoins Surge, DeFi Finds Purpose
Away from the headlines, stablecoins are quietly gaining traction. As currency volatility and cross-border friction grow, businesses are increasingly using USDT and USDC to settle trade, hedge FX exposure, and bypass expensive traditional rails.
Analysts from JPMorgan and Bloomberg note that persistent trade barriers could accelerate adoption of DeFi protocols for lending, clearing, and payments. Even the Trump administration appears to be recalibrating its stance on digital assets. A new executive order on “American Leadership in Digital Financial Technology” hints at a shift from regulation-by-enforcement to proactive policy.
ChainStreet’s Take
The tariff war is exposing crypto’s core tension: it behaves like a risk asset under pressure, but promises the long-term utility of a monetary hedge. This moment is not a failure of crypto’s thesis—it’s a stress test.
What we’re seeing isn’t just price action. It’s structural evolution. Bitcoin is reacting like a tech stock because institutional portfolios treat it like one. But under the surface, stablecoins are quietly becoming the preferred rails of an unstable global economy.
