TLDR
- Bitcoin and other cryptocurrencies experienced sharp declines after initial gains, with BTC dropping from $88,500 to around $83,500
- President Trump imposed sweeping tariffs: 10% minimum on all US imports, with higher rates for major trading partners (China 50%, Japan 24%, EU 20%)
- Market volatility led to $450 million in crypto futures liquidations in 24 hours as tariffs went into effect
- Both bullish and bearish positions were affected, with BTC-tracked futures seeing $172 million in liquidations
- Analysts suggest that while the tariffs caused initial volatility, the market clarity might be positive in the long term
President Donald Trump’s latest tariff announcements sent cryptocurrency markets into a tailspin, with Bitcoin and other major cryptocurrencies experiencing sharp price swings. After initially climbing above $87,000, Bitcoin quickly reversed course, dropping to around $83,500 as traders reacted to the sweeping new trade policies.
The tariffs, which take effect April 5, impose a minimum 10% fee on all imports to the United States. Some countries face much steeper rates. China will see a 50% hike on several goods, while Japan and the European Union face 24% and 20% tariffs respectively.
Trump made the announcement during an April 2 speech from the White House Rose Garden, where he declared a “national emergency” related to trade. He stated that the US is now charging countries “about half of what they are and have been charging us.”
🚨 @POTUS signs an Executive Order instituting reciprocal tariffs on countries throughout the world.
It's LIBERATION DAY in America! pic.twitter.com/p7UnfE617B
— Rapid Response 47 (@RapidResponse47) April 2, 2025
Market Reaction Shows Extreme Uncertainty
The cryptocurrency market’s response revealed deep uncertainty among traders. Bitcoin briefly rallied to a session high of $88,500 before dropping 2.6% to around $82,876.
Ethereum took an even harder hit, falling over 6% from $1,934 to $1,797 following the announcements. The total cryptocurrency market capitalization dropped 5.3% to $2.7 trillion.
Both long and short positions felt the impact. Data shows crypto futures racked up $450 million in liquidations in just 24 hours as the tariffs came into play.
Bitcoin-tracked futures alone registered over $172 million in long and short liquidations. Ethereum futures saw $120 million in liquidations, with smaller altcoins accounting for an additional $50 million.
Investor Sentiment Turns Fearful
The Crypto Fear & Greed Index, which measures market sentiment, returned a score of 25 in its April 2 update. This places the market firmly in “extreme fear” territory.
Traditional markets showed similar stress. The S&P 500 reportedly erased over $2 trillion in market cap, working out to roughly $125 billion per minute during the sell-off.
Rachael Lucas, a crypto analyst at Australian exchange BTC Markets, described the market’s initial upward movement as “uncertainty relief,” followed by a sell-off as the full tariff details emerged.
“On BTC Markets, trading volume surged 46% as local traders scrambled to reposition. Big players took profit on the spike, while smaller investors hesitated,” Lucas said in a statement.
She warned that if China or the European Union “hit back hard” with their own tariffs, another round of panic selling could follow.
Looking for Long-Term Clarity
Some analysts see a potential silver lining in the market turmoil. US Treasury Secretary Scott Bessent urged US trading partners against taking retaliatory steps in an April 2 interview.
Bessent argued that “this is the high end of the number” for tariffs if other countries don’t try to add more levies in response. This could provide a “ceiling” and greater certainty for markets moving forward.
David Hernandez, a crypto investment specialist at 21Shares, noted that while markets experienced high volatility during Trump’s speech, the clarity could benefit investors in the long term.
“Although the tariff rates were higher than expectations, the announcement provided much-needed clarity on the scope and scale of the policy,” he said.
Hernandez added that “markets thrive on certainty, and with speculation now largely removed, institutional investors may see an opportunity over the coming days to take advantage of compressed valuations.”
As of Thursday morning in Asia, Bitcoin had stabilized slightly above $83,500 while Ethereum traded just over $1,800. Both effectively reversed all gains from Tuesday after a sudden drop following the Tokyo market open.
Liquidation patterns suggest unusual market conditions. When an exchange forcefully closes a trader’s leveraged position due to loss of margin, it’s known as liquidation. Typically, single-sided large liquidations can signal a local top or bottom of a price move.
However, Thursday’s balanced liquidations across both bullish and bearish positions point to genuine market uncertainty rather than a clear directional signal.
Gold prices set another record high amidst the turmoil, while U.S. 10-year Treasury yields slumped to their lowest level in more than five months.
Global responses from major trading partners will likely determine the next moves in cryptocurrency markets, as countries evaluate potential countermeasures to the new American tariffs.
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