TLDR
- Bitcoin fell 15% after Trump’s tariff post but recovered to $115,000 by Monday.
- Bitwise found no major institutional losses despite heavy market liquidations.
- Blockchains like Uniswap and Aave stayed operational during extreme volatility.
- Hougan says crypto fundamentals remain strong with continued institutional growth.
A sharp sell-off in digital assets shook traders last week after President Trump announced steep tariffs on Chinese imports, sending shockwaves across the crypto market. Bitcoin and other major tokens plunged in late Friday trading before bouncing back within days. Bitwise Chief Investment Officer Matt Hougan said the market’s fast recovery showed the event was temporary and not a change in crypto’s long-term direction.
Market Reaction to Trump’s Tariff Threat
The market turbulence started when Trump posted on Truth Social that he planned to impose 100% tariffs on all Chinese imports. The move came after China warned of restricting exports of rare earth metals, which are vital to U.S. technology production.
With traditional markets closed over the weekend, crypto became the first arena for traders to respond. Bitcoin dropped nearly 15%, reaching about $100,000 on some platforms, while Ethereum fell by over 20%. Solana saw the sharpest drop, losing up to 40% before rebounding. By Monday, Bitcoin had recovered to about $115,000 after Trump sought to ease tensions.
Hougan’s View on Market Fundamentals
In a note to clients, Hougan said the decline did not alter crypto’s broader outlook. He wrote that “nothing fundamental to its outlook — things like its underlying technology, its security, or the regulatory environment — changed.” Hougan argued that the quick rebound showed confidence in the market’s structure and its participants.
He pointed out that Bitwise’s network of partners, including custodians and liquidity providers, reported no major institutional losses. “Firms experienced losses, but it looks like they’ll all survive,” he said. The resilience of these service providers helped restore stability and prevent further selling pressure.
Technology and Market Infrastructure Performance
Hougan noted that blockchain systems operated smoothly during the episode. Platforms such as Uniswap, Hyperliquid, and Aave continued to function, allowing users to trade and manage positions without interruption. He said this performance supported the idea that decentralized technology can withstand stress better than expected.
Some centralized exchanges experienced issues. Binance refunded users about $283 million after depegging incidents and later launched a $400 million recovery program. Despite these problems, Hougan wrote that the overall market handled the stress “as well as or better than traditional markets might have.”
Investor Response and Short-Term Outlook
According to Hougan, investor behavior offered another sign of stability. “If I’m bombarded by emails, calls, or texts from investors, I know there’s real panic,” he said. This time, he received few messages, suggesting professional investors remained calm. While media attention spiked, most institutional players viewed the drop as a short-term trading event.
Hougan expects some near-term caution as liquidity providers temporarily reduce activity after such volatility. This may cause short-lived price swings. Still, he said the broader market is likely to regain focus on factors driving growth, including institutional adoption, better regulation, and technological progress.
Hougan concluded that the flash crash “won’t be of any lasting consequence,” emphasizing that crypto’s long-term trajectory remains intact. He said that once liquidity returns, the market is expected to resume its upward trend.
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