Bitcoin Struggles in Q1 Amid Tariff Concerns, But Institutional Sentiment Remains Positive for the Long Term

Bitcoin’s first-quarter performance in 2025 concluded with an 11% drop, reflecting a tough market environment, its worst quarter since 2022. The cryptocurrency’s struggles coincide with an upcoming wave of U.S. tariffs set to kick in on April 2, which has added to the uncertainty facing both Bitcoin and broader financial markets.

During Tuesday’s European trading session, Bitcoin (BTC) was inching towards $85,000, largely as traders await the market’s response to the imminent tariffs. At the same time, Dogecoin (DOGE) and Cardano (ADA) each posted gains of more than 7%, leading a modest recovery among major cryptocurrencies. Ethereum (ETH), XRP, Solana’s SOL, and BNB Chain’s BNB also saw gains of nearly 5%.

Despite these small rallies, the overall cryptocurrency market capitalization saw a 3% decrease, according to CoinGecko data, while the CoinDesk 20 index managed to climb 3% in the past 24 hours. This comes amid broader risk aversion, as U.S. equities slumped, with the S&P 500 experiencing a 3% loss last week, marking its worst performance since September 2023. The surge in gold prices further exemplified a move toward safe-haven assets.

As the new tariffs approach, there’s an air of unease that has impacted market sentiment. According to Augustine Fan, head of insights at SignalPlus, the market is lacking new catalysts, such as major ETF inflows, and seems stuck in a phase of low conviction. This has contributed to Bitcoin’s 11% loss during the quarter, alongside similar downturns in the broader stock market.

Futures data from the CME has revealed a drastic shift in market sentiment, with speculative positions on Bitcoin becoming markedly bearish — a sharp contrast to the bullish optimism seen at the start of the year. Although Fan cautioned that positioning data is more of a reflection of current market conditions than an immediate trading signal, he highlighted that if a bullish trend emerges, it could be sharp due to the current heavy short positioning.

On the positive side, data from Glassnode indicates that long-term Bitcoin holders are weathering the storm, with investors holding positions for 3-6 months seeing growing profits, even as prices trade near their lowest levels since June 2021. Additionally, newer large Bitcoin investors, often referred to as “whales,” have opted to hold onto their positions rather than cashing out, which helps to provide stability to Bitcoin’s price.

Jupiter Zheng, a partner at HashKey Capital’s Liquid Fund and Research, noted that while the upcoming tariffs and recent economic data present short-term headwinds, he remains confident about Bitcoin’s long-term prospects. Zheng emphasized the growing institutional adoption of crypto and the increasingly favorable regulatory environment, which he believes will continue to support market growth despite the present risk-off sentiment.

In conclusion, while Bitcoin faces challenges in the short term, particularly with the looming tariffs and broader market uncertainty, the cryptocurrency market’s longer-term outlook remains robust due to continued institutional interest and regulatory developments aimed at supporting further adoption.