During the early hours of trading in Asia on Wednesday, Bitcoin and Ether experienced significant declines amid escalating concerns regarding a prolonged trade conflict between the United States and China. Investors prepared for the impending implementation of President Donald Trump’s sweeping new tariffs.
The cryptocurrency market mirrored the volatility seen in traditional equities as anxiety intensified, diminishing any hopes for immediate tariff negotiations ahead of an approaching deadline.
Bitcoin fell by 5.6%, dropping to $75,523, while Ether saw a sharper decline of 10.7%, settling at $1,417. The overall cryptocurrency market also faced downward pressure, with total market capitalization decreasing by 7.2% to $2.4 trillion over the past 24 hours, despite modest gains in some alternative coins.
Investor sentiment further deteriorated following a confirmation from the White House on April 8, revealing plans to elevate tariffs on Chinese imports to 104%. This announcement came after China indicated intentions to retaliate against the U.S. move.
Although there was a brief moment of optimism earlier today with Bitcoin climbing back to $80,200 and the S&P 500 starting the day on a positive note, no significant progress has been made in tariff discussions. Developments of note:
Bitcoin is back down to… pic.twitter.com/OrNEmJhBJH
— Santiment (@santimentfeed) April 8, 2025
Tariff Escalation Hits Stocks as Crypto Tracks Broader Market Moves
The tensions surrounding tariffs also rattled traditional financial markets. On Tuesday, all three major U.S. stock indices closed down, with the S&P 500 dropping below the 5,000 mark for the first time in nearly a year.
“With Trump threatening an additional 50% tariff on China and Beijing unwilling to concede, market sentiment could shift rapidly,” commented Lukman Otunuga, senior market analyst at FXTM. “These markets are on edge—any escalation could unleash a wave of risk aversion.”
Since Trump introduced the global tariff framework last Wednesday, S&P 500 companies have seen a staggering loss of $5.8 trillion in market value—the most significant four-day decline for the index since it began in the 1950s, based on data from LSEG.
The unpredictability in Trump’s statements has further contributed to market volatility. He has labeled the new tariffs as “permanent,” yet simultaneously claims that they are driving leaders towards negotiations. This conflicting messaging has led to heightened uncertainty across global markets, leaving investors unsure of future developments.
Although cryptocurrencies were traditionally viewed as uncorrelated with standard financial markets, recent behaviors indicate a shift. In periods of broader market turbulence, both Bitcoin and Ether have increasingly reflected movements in technology stocks and larger market indices. This trend is particularly pronounced during risk-off periods, where investors tend to withdraw from all volatile assets.
Inflation Report Adds to High-Stakes Week for Markets Under Pressure
Investors are now focusing on Thursday’s U.S. Consumer Price Index (CPI) report, which could further influence market sentiments.
“If the CPI reading exceeds 3.4%, we could see an intensification of market concerns surrounding persistent inflation,” noted Marcin Kazmierczak, co-founder and COO of RedStone. Such an outcome might spark another wave of selling in both equity and cryptocurrency markets as traders reassess expectations for imminent rate cuts, he added.
On the other hand, a lower CPI reading, falling below 3.2%, could offer temporary relief, potentially alleviating inflation fears and countering the negative effects of trade tensions, which may in turn uplift both equity and crypto markets.
Bitcoin, which has shown relative strength compared to Ether in recent days, could find advantages in this scenario, reinforcing the notion that its market behavior may be deviating from conventional risk assets amid macroeconomic uncertainties.
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