Crypto Market Sinks as Fresh U.S. Tariffs Trigger Risk-Off Sentiment

The global cryptocurrency market suffered heavy losses on Friday, erasing all gains since Donald Trump’s election victory in November, as new U.S. tariffs on China rattled investor confidence and fueled demand for the dollar.

Bitcoin Slips Below $80K, Altcoins Plunge

Bitcoin (BTC) tumbled 7% to $79,000, marking its lowest level since November and extending a nearly 30% drop from its January peak of over $108,000. The broader market fared even worse, with altcoins experiencing steeper declines. XRP and Dogecoin (DOGE) plunged over 10%, while Ether (ETH), Cardano’s ADA, and Binance’s BNB all posted losses of at least 9%.

Total crypto market capitalization fell 8% to $2.7 trillion, effectively wiping out all progress since early November. The CoinDesk 20 Index (CD20), which tracks the largest cryptocurrencies, slid nearly 9%, reflecting broad-based selling pressure.

Stock Market Weakness Spills Into Crypto

Investor sentiment across global markets turned bearish as a combination of overextended valuations and escalating trade tensions weighed on equities. Despite Nvidia’s strong earnings report midweek, stock markets faltered, with chipmakers leading the decline.

“Risk appetite has deteriorated sharply as traders digest the implications of Trump’s latest tariff hikes,” said Augustine Fan, head of insights at SignalPlus, in a message to CoinDesk. “Crypto markets, which have struggled with liquidity constraints and ETF outflows, are now facing additional headwinds from macroeconomic uncertainty.”

Tariffs Shake Chinese Markets, Add Pressure on Bitcoin

Chinese stocks also slumped as Trump confirmed that a new 10% tariff on Chinese imports will take effect next week, adding to concerns about slowing economic growth. The move follows an earlier round of tariffs imposed this month and comes just days before China’s National People’s Congress, where policymakers are expected to unveil new economic initiatives.

“China’s response will be critical in determining the near-term direction of risk assets,” said Fan. “If stimulus measures are introduced, it could provide some relief, but uncertainty remains high.”

Crypto Traders Turn Defensive

With bearish sentiment dominating, traders are adjusting their positions accordingly.

“Options traders are shifting toward downside protection, with demand for put options rising as bullish bets are unwound,” Fan noted.

Additionally, MicroStrategy’s (MSTR) stock dropped 10%, raising concerns about its leveraged Bitcoin holdings. Given its influence on institutional sentiment, further declines in MSTR could add to market volatility.

For now, traders remain cautious, with many watching key macroeconomic developments—including China’s policy response and U.S. economic data—for potential market-moving signals in the days ahead.