Bitcoin Faces Turbulent Market Amid Tariffs and ETF Sell-Offs
By: Isha Das
The cryptocurrency market is witnessing a major upheaval, with Bitcoin plunging below $90,000, a mark not seen since mid-November 2024. The dip follows a slew of macroeconomic and geopolitical events that have sent tremors through the digital asset landscape. Recent reaffirmations by President Trump regarding the imposition of tariffs on Canadian and Mexican imports have intensified selling pressure across markets. These tariffs, intended to address illegal immigration and fentanyl trafficking, include a 25% levy on all imports from Canada and Mexico. This declaration has led to a broader crash across major cryptocurrencies, with Ethereum and other digital assets falling between 5% to 13% in the past 24 hours.
Contributing to the market volatility is the continued fallout from the largest hack in crypto history, impacting Bybit, which saw $1.5 billion in Ethereum compromised. This incident has further eroded investor confidence, contributing to a massive liquidation spree totaling $1.3 billion. Bitcoin suffered the brunt of these losses with over $523 million liquidated, further exacerbating the market's downward momentum. Furthermore, the market is grappling with the impacts of speculative trading strategies that have longed ETFs and shorted futures, adding another layer of complexity to Bitcoin's pricing dynamics. Prominent figures like Arthur Hayes have warned of potential further price drops to $70,000 should these factors persist.
The uncertainties surrounding Bitcoin's future are compounded by the outflows from USD-based Bitcoin exchange-traded funds (ETFs), which recorded significant redemptions due to economic uncertainty. This capital exodus reflects a broader cautious sentiment towards cryptocurrencies amidst the current geopolitical tensions and potential retaliatory measures from tariff-afflicted countries. Investors brace for more volatility ahead, as macroeconomic factors align with the already existing security and regulatory pressures in the crypto space.
Despite these challenges, some analysts maintain an optimistic outlook, suggesting that while the downturn is severe, it does not necessarily foreshadow a bear market. They highlight historical precedence for strong rebounds following significant dips, underscoring increased risk aversion yet substantial growth potentials in the crypto market. Nevertheless, stakeholders remain vigilant, closely monitoring developments for any signs of stabilization or further escalations that could redefine the landscape of digital assets.
