Bitcoin Drops 5% on Tariff Fears
Bitcoin fell as much as 5% to $64,270 following renewed tariff threats from the Trump administration, with the selling intensified by thin liquidity and large holders moving coins to exchanges. After the initial drop, Bitcoin rebounded to around $66,300, but overall sentiment remains cautious as risk assets face pressure from global trade uncertainty.
- The tariff announcement followed a U.S. Supreme Court ruling that found President Trump had overstepped his authority by using the International Emergency Economic Powers Act (IEEPA) for previous tariffs. The administration is now citing Section 122 of the Trade Act of 1974, which allows for temporary levies for 150 days to address balance-of-payments issues. - The market reaction extended beyond cryptocurrency, with S&P 500 futures dropping 0.8% and Nasdaq 100 futures sliding 1% in early trading as the tariff news broke. In response to the uncertainty, the European Union halted the ratification process of its trade agreement with the U.S. - The price drop triggered a cascade of liquidations in the derivatives market, with about $486 million in leveraged positions wiped out over a 24-hour period. Long liquidations accounted for $392 million in the 12 hours following the tariff announcement. - This event underscores Bitcoin's current behavior as a risk asset, moving in correlation with equities during macroeconomic shocks. While sometimes touted as "digital gold," Bitcoin sold off while traditional safe-haven assets like gold rallied on the trade uncertainty. - The sell-off adds to a challenging year for the digital currency, which has seen its price decline by roughly 25% year-to-date. - Prior to this drop, institutional sentiment was already showing signs of weakness, with U.S.-listed spot Bitcoin ETFs experiencing five consecutive weeks of net outflows, totaling $3.8 billion.
