Following a brief uptick on April 1, Bitcoin and several major altcoins began to decline once more as Liberation Day approached.
The week commenced on a positive note, with the market rebounding as traders reacted favorably to indications that U.S. President Trump had finally settled on a trade approach after weeks of erratic tariff threats. His inconsistent position on key trading partners had kept investors anxious, so any sign of clarification was a welcome relief.
Ethereum, Dogecoin, and Solana joined Bitcoin (BTC) in the broader market rally, with BTC surging over 3.3% on Tuesday. Ethereum (ETH) rose to approximately $1,917, marking a 4% increase for the day. Dogecoin (DOGE) nudged above $0.17, a 3% gain, while Cardano (ADA) saw a 2.5% rise. However, the upward momentum quickly faded as lingering concerns resurfaced.
With Trump’s reciprocal tariffs set to take effect today, market jitters have returned.
At the time of writing, BTC had dropped 1.36% from its April 1 peak of $85,413. Other major altcoins like ETH, XRP, SOL, and DOGE experienced steeper declines, with losses ranging from 3-5%.
The global market capitalization decreased by 2.1% to $2.85 trillion as risk-averse sentiments prevailed. Traditional stock markets, including the S&P 500 and Russell 2000, also declined over the past week, with major tech companies like Nvidia, Amazon, and Tesla falling between 5-7% during the same timeframe.
Experts are currently divided regarding the market’s forthcoming direction.
Could History Repeat Itself?
As per insights from crypto analyst Ash Crypto, the last significant tariff dispute in 2019 witnessed the Nasdaq plummeting by 12% while Bitcoin surged nearly 70% as investors sought refuge outside traditional markets.
During that period, BTC skyrocketed from below $6,000 to nearly $13,800 within just a few months, while gold similarly benefited from safe-haven investment flows.
The analyst noted that this surge was not solely due to fear. The Federal Reserve’s implementation of three rate cuts that year provided “cheap money,” subsequently boosting both stocks and cryptocurrencies later in the cycle. Essentially, traders braced for adverse conditions but also anticipated central banks would mitigate the impact.
Fast forward to 2025, and while the setup appears reminiscent, the analyst highlighted some crucial differences. Inflation appears to be running high, which restricts the Fed’s room for maneuver. Unlike in 2019, aggressive rate cuts might not be feasible this time. This could leave risk assets, including cryptocurrencies, without a buffer if market conditions deteriorate.
Nonetheless, Ash Crypto posits that Bitcoin could once again decouple from equities, particularly if trade tensions escalate further. He cautioned, however, that if China retaliates with its own tariffs or if inflation continues to rise, the Federal Reserve may postpone rate cuts, which could lead to renewed volatility across both cryptocurrency and traditional markets.
Differing Opinions Among Experts
Former BitMEX CEO Arthur Hayes argues that Bitcoin could actually flourish in the current climate. He believes that tariffs won’t impede Bitcoin; instead, they might catalyze its next major movement.
Hayes predicts that if the economy slows due to rising import expenses, the Federal Reserve will have to step in with liquidity support, similar to past crises.
He projected that Bitcoin could potentially reach $110,000 if the Fed loosens its monetary policy in response to slowing economic growth. Hayes also mentioned that if tariffs exceed 50%, the rally could intensify further, driven by an increased demand for decentralized assets.
On the other hand, skeptics like Peter Schiff disagree with the optimistic outlook. The long-time critic of Bitcoin suggests that Liberation Day could reveal the cryptocurrency’s fundamental weaknesses, especially if the new tariffs induce economic turmoil. In that case, Schiff anticipates Bitcoin might drop below $50,000.
He is also skeptical of the optimism surrounding Trump’s pro-crypto stance, arguing it would be irrelevant if inflation spikes and global growth suffers. He asserts that traditional safe havens like gold and bonds are much more likely to outperform speculative assets like Bitcoin during turbulent times.
Market analyst Alex Kruger has warned that a strict tariff policy announced on Liberation Day could trigger a 10-15% downturn in the crypto market within days. See below: