Bitcoin Drops 5% on Tariff Fears

- The tariff threat stems from President Trump's announcement to raise a global tariff rate from 10% to 15%. This new authority is being enacted under Section 122 of the 1974 Trade Act, which permits tariffs for 150 days without Congressional approval, and follows a Supreme Court decision that struck down his previous use of emergency authority for tariffs. - The cryptocurrency market's reaction occurred within a broader risk-off environment, as S&P 500 futures dropped 0.8% and Nasdaq 100 futures fell 1% in response to the tariff news. In contrast, traditional safe-haven asset gold saw its futures climb 1.6%. - The selloff has contributed to a difficult year for Bitcoin, which has declined 25% since the start of 2026 and erased all gains made after the November 2024 election. The Crypto Fear and Greed Index has fallen to a level of "Extreme Fear," a low not seen since 2019. - U.S.-listed spot Bitcoin ETFs have experienced five straight weeks of net outflows, totaling $3.8 billion, indicating waning institutional interest. - The drop was worsened by thin market liquidity, a condition where fewer buyers and sellers lead to exaggerated price swings from relatively small trades. This was compounded by large holders, or "whales," moving significant amounts of Bitcoin to exchanges, signaling a potential intent to sell. - XRP's weekly on-chain realized losses reached between $908 million and $1.93 billion, the largest such spike since November 2022. This metric signifies that a large number of investors sold their XRP at a price lower than what they originally paid. - Other major cryptocurrencies also experienced declines, with Ethereum (ETH) falling 5.2% and Bitcoin Cash (BCH) dropping 6.2%.