Liberation Day or Liquidation Day? How Trump’s Tariffs Trigger Crypto Sell-Off and Panic

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The “national emergency” declared by US President Donald Trump on April 2, 2025, resulted in massive turmoil in the markets, notably the cryptocurrency markets. The new sharp tariffs on multiple countries led to a crypto-market bloodbath. The already fragile economy because of the trade wars was sent into deeper recession with the newly imposed tariffs. Bitcoin (BTC), for the first time, reached and then lost literally 20% of its peak price. Ether (ETH) followed the trend and plunged alongside global stock markets.

Trump Speech Tackling Tariffs and Market Recession

While giving a speech at the Rose Garden, President Trump proclaimed a national emergency would be declared and stated a 10 percent tariff would be imposed on all countries from April 5, 2025. Countries like China would have to endure even harsher tariffs set at 34 percent, while the European Union would have tariffs set at 20 percent. Finally, Japan would face 24 percent tariffs.

Hearing these announcements, traders held onto the fleeting hope of crypto prices surging even further, but once the tariff details were revealed, the market took a nosedive. Bitcoin, which reached a staggering session high of $88,500, went into freefal,l dropping 2.6 percent to around $82,876. The same fate was shared by Ethereum (ETH) which tumbled over 6 percent from $1,934 to $1,797. In tandem, the entire crypto market also felt the burn, experiencing a 5.3 percent dip in total market cap, bringing it down to $2.7 trillion.

The Crypto Fear & Greed Index Shows Extreme Fear

After the announcement, the Crypto Fear & Greed Index, which tracks market sentiment, showed a score of 25, which falls under “extreme fear.” The knee-jerk reaction to the announced tariffs and persistent anxiety around the condition of international trade drives this sentiment.

Crypto market analyst Rachael Lucas claimed, “On BTC Markets, trading volume surged 46% as local traders rushed to change their positions.”

This reinforces the notion that increased fear leads to capitulation. These sharp moves clearly defined the market’s uncertainty, leading to aggressive buying and psychologically driven selling.

Despite recovering 0.8% to $83,205, Bitcoin remains uninspired. Ether increased 1.2% to $1,810, but still the bearish sentiment prevailed overall.

The New Tariffs and Their Global Economic Impact

The consequences of Trump tariffs extends far beyond the cryptocurrency markets and now includes global stock markets. As an example, the S&P 500 index lost in excess of $2 trillion in market capitalization shrunk, or roughly $125 billion each minute. Per The Kobeissi Letter, this was a reflexion of the entire trade market’s panic regarding the new policies.

Crypto investment specialist at 21Shares David Hernandez pointed out, “While the tariff rates were a bit higher than the expectations on the announcement, at least it was evident that the policymakers were very clear and definitive on what is going to be undertaken.”

Hernandez is of the opinion that although there will be some volatility in the medium term due to the announcement, in the long term, markets will appreciate the certainty that has clarity.

The Long-Term Outlook: Markets prosper on Certainty

Although the tariffs caused some crypto market volatility in the short term, Hernandez remains cautiously optimistic.

David Hernandez underlined that “markets thrive on certainty,” adding that the speculation has largely been removed, which allows institutional investors to capitalize on “compressed valuations.”

As has been highlighted, the global reaction will be of primary importance going forward. “Markets will be watching closely for responses from China and the European Union and other key economies,” Hernandez noted.

Should these parties respond aggressively, the panic selling will likely become more pronounced. On the other hand, if countries respond calmly, there will be an opportunity for the market to stabilize and start recovering.

Conclusion on Trump Tariffs: What Does This Mean for Crypto Investors?

The Trump crypto tariffs brought serious short-term disruption with an unclear resolution. Yet, his announcement also provided some clarity. Now that they have been set, the markets can stabilize to some extent, which benefits long-term investors. Like any geopolitical situation, it always has to be watched in terms of how the rest of the world reacts to it.

Investors need to keep tracking the changes very carefully, especially with the approaching April 5, 2025 deadline for tariff enactment. For crypto enthusiasts, the situation calls for caution but also for targeting long-term prospects as volatility lessens.

FAQs

Q1: What caused the drop in cryptocurrency prices?

A1: The statement from President Donald Trump announcing a national emergency along with imposing wide-ranging tariffs on other nations caused a drop in cryptocurrency prices. Tariff discloser within those broad parameters was not received in a good way.

Q2: How did the market react to Trump tariffs?

A2: There was a tentative uptick in the crypto market; Bitcoin and Ethereum’s value rose but the euphoria was short lived and after the unfurling of the rimrock details of the tariffs, both experienced a steep decline along with the overall crypto market cap falling by 5.3” percent.

Q3: Are we dealing with a temporary reaction to the news or will it have a lasting impact on crypto?

A3: Even though the experts tend to think that the reaction is late and negative, it seems like the reaction is variously from the market providers would be more permissible sufficiently to counterbalance the volatile conditions created by the announcement of the tariffs.

Glossary of Key Terms

Nationally recognized and labeled emergency: An Emergency mistakenly declared by a government in order to solve a contrived crisis while requiring authoritarian control to manage.

Crypto Panic and Hysteria Measurement Tool: A resource used for evaluating the overall mood of the cryptocurrency scenario accounting various phases of extreme panic, utter chaos, as well as greed and theft.

Market Capitalization: The total worth of a market is determined by determining the worth of an asset and multiplying it by the quantity available for that asset.

Tariff: A tax that is charged on the importing and exporting of goods between two nations, generally aimed at protecting domestic businesses or as leverage in foreign trade discussions.

Speculation: The execution of buying and selling within the financial marketplace on the basis of predicted changes which might happen to the market in the future.

References

Cointelegraph: “Crypto markets react to Trump’s tariffs: A national emergency declared.”
The Kobeissi Letter: “Stock market hit by $2 trillion loss after tariff announcement.”
Bloomberg: “US Treasury Secretary’s statement on the tariff ceiling and market responses.”