Bitcoin ($BTC) fell below $77,000 today after US President Donald Trump announced a 104% tariff on Chinese imports, adding new pressure to global markets already unsettled since 2 April.
The tariff announcement caused sudden volatility across risk assets. Both the S&P 500 and Nasdaq jumped nearly 4% during the day, but later gave up most of their gains. Bitcoin followed a similar path, briefly climbing above $80,000 before dropping back under $77,000.
Ahead of the tariff decision, President Trump held talks with allies including South Korea and Japan, creating short-lived market optimism. The White House said around 70 countries had contacted them seeking trade agreements.
Trump described these talks as a “beautiful and efficient” process. However, despite the discussions, he confirmed that the 104% tariffs on Chinese goods would move forward, beginning at midnight on 9 April.
China responded firmly on 7 April, promising to “fight to the end” against what it called “US blackmail”. This made it clear that a compromise was unlikely.
The economic impact has increased fears of a slowdown. Goldman Sachs recently raised its forecast for a US recession to 45%, pointing to tighter financial conditions and rising trade uncertainty.
Similarly, JPMorgan now expects the Federal Reserve to start cutting interest rates from June 2025, with cuts at every meeting and an additional one in January, bringing the benchmark rate’s upper bound down to 3%.
A Bloomberg report quoted the portfolio manager and co-head of global fixed income at Loomis Sayles, David Rolley, who said that tariffs are “the only tax they can hike”. His colleague Pramila Agrawal estimated a 60% chance of a US recession.
Meanwhile, a multi-asset and emerging market debt strategist at Loomis Sayles, Andrea Dicenso, pointed out that investors are now favouring European and Latin American markets, considering them more stable than the US.
Goldman Sachs has also warned that the tariffs could cut China’s GDP growth by 2.4 percentage points, pulling it down to 4.5% for 2025. They noted that this could derail Beijing’s 5% growth target for the year.
China’s economy, which heavily depends on exports to the US, faces significant risks if trade tensions continue to rise.
The 104% duty includes a 34% hike announced last week, adding to earlier tariffs. The White House said the goal is to rebalance trade and penalise countries that run surpluses with the US. A minimum 10% tariff now applies to nearly all US trading partners, with higher rates for surplus countries.
Even smaller economies were hit hard, with 50% on Lesotho, 47% on Madagascar, 46% on Vietnam, and 32% on Taiwan. Major US allies like South Korea, Japan, and the EU now face levies between 20% and 25%.
Beijing has promised to retaliate, and Trump has threatened another 50% hike on top of the current tariffs if necessary. Economists warn that these escalating tariffs could put new strain on global supply chains and bring fresh volatility to already shaky markets.
Bitcoin ETF outflows and market liquidity concerns
On Tuesday, spot Bitcoin ETFs recorded $326.27 million in outflows, marking the fourth straight day of net losses. It was also the biggest single-day outflow since 10 March, showing a clear shift in investor sentiment.
This continued capital outflow suggests that large investors are reducing risk in their portfolios as macroeconomic pressures increase. Institutional flows had previously played a key role in pushing Bitcoin’s price up through ETF demand, making the recent trend notable.
Data from SosoValue shows that BlackRock’s ETF, IBIT, experienced the highest net outflow on Tuesday, losing $252.29 million. Despite the outflows, IBIT’s total historical net inflow still stands at $39.66 billion.
Bitwise’s ETF, BITB, came next, with $21.27 million in daily net outflows. Its total historical net inflow remains at $1.97 billion.
For the second time this week, none of the twelve US-listed spot Bitcoin ETFs reported a single day of net inflow.
At the same time, open interest (OI) in Bitcoin futures stayed weak. As of now, it stands at $50.81 billion, a 0.27% drop from the previous day. A decline in OI usually means that existing futures contracts are closing or being liquidated faster than new ones are opening, reflecting lower trader participation and weaker conviction in the market trend.
Still, many futures traders remain positive. The coin’s funding rate, which measures the cost of holding long positions, is currently positive at 0.0090%.
This means that traders are still paying a premium to bet on Bitcoin’s price going up, even though overall participation is falling.
On the options side, the demand for call contracts has now surpassed puts. This shows that more traders are betting on or preparing for potential price increases, suggesting some confidence in a possible rally.
Meanwhile, new tariffs and growing trade tensions are forcing investors to rethink their strategies. Both traditional stocks and cryptocurrencies are facing new challenges.
CNBC reported that stock markets fell on Tuesday as early gains faded and concern about Trump’s looming tariff deadline grew.
Originally, China was set for a 34% tariff hike, but Trump raised it to 50% after China refused to lift its retaliatory tariffs.
The Dow Jones Industrial Average closed down 320.01 points, or 0.84%, at 37,645.59. Over the last four days, the index has dropped more than 4,500 points. Apple saw some of the steepest losses, as new tariffs are expected to sharply raise its costs.
Bitcoin markets were not spared, with the world’s largest cryptocurrency falling in response to Trump’s tariffs.
Officials from Trump’s administration defended the tariff move, saying many countries had shown interest in negotiating trade agreements.
However, a recent report warned that the new tariffs could fundamentally alter the global Bitcoin mining landscape, putting US miners at a disadvantage.
Tariffs threaten Bitcoin mining competitiveness
The new tariffs will also likely raise the cost of essential mining equipment, hitting imports hard and potentially affecting the global hashrate.
The CEO of Hashlabs Mining, Jaran Mellerud, explained that the new reciprocal tariffs would increase the cost of importing mining machines into the US by at least 24% compared to tariff-free countries like Finland.
The US heavily relies on Bitcoin mining equipment produced in Southeast Asia, especially from companies like Bitmain, MicroBT, and Canaan.
While a 25% tariff on Chinese machines had already existed for several years, manufacturers had bypassed it by moving production to Southeast Asia.
“This strategy was effective until earlier this month when Trump raised tariffs on goods imported from Indonesia, Malaysia, and Thailand to 32%, 24%, and 36%, respectively”, Mellerud said.
Now, these companies can no longer fully avoid high tariffs. Demand in the US is expected to drop, leading to surplus inventory. To clear the extra stock, manufacturers may lower prices elsewhere.
“While it’s difficult to predict exactly how much machine prices will fall—since mining profitability also plays a role—we can confidently say that, based on basic economic principles, a decrease in demand for an asset typically leads to a drop in its price”, the report added.
The effects go beyond mining equipment prices. The US, which currently accounts for around 36% of the global Bitcoin mining hashrate, risks losing market share.
Higher operational costs make the US less attractive for miners to expand operations. Meanwhile, miners in unaffected countries may gain a competitive advantage.
“In the broader picture, this may lead to a more geographically diverse Bitcoin mining landscape than ever before. While the US will remain a major player, its dominance will fade, giving rise to a more globally distributed hashrate”, Mellerud noted.
In the short to medium term (1-2 years), slower US expansion could reduce global hashrate growth. However, the report stressed that it is unlikely that the US mining sector will stop growing completely.
“The assumption of a 36% reduction in global hashrate growth should be seen as an absolute upper limit—the actual impact will likely be somewhat lower”, Mellerud stated. Over time, miners in other countries may speed up expansion to fill the gap.
Adding to market worries, Bitcoin slid towards $77,000 on Friday as a sharp selloff in US bonds triggered a fresh wave of risk aversion. Investors fled long-dated US treasuries, pushing 30-year yields to 4.98%—one of the largest single-day jumps since 2020.
The tariff shock led investors to price in higher US borrowing costs and a more protectionist trade stance. Jim Bianco, who is a well-known analyst, noted that the 30-year yield’s spike was the biggest since 1982. He suggested that the sharp move was likely driven by forced liquidations by large institutions rather than normal trading.
Bitcoin, often seen as a hedge against financial market stress, fell by around 2% over 24 hours. It was trading near $77,260 at the time of writing, with its market capitalisation slipping to $1.53 trillion.
Data from Coinglass shows that if Bitcoin falls below $74,000, almost $500 million worth of leveraged long positions could be liquidated, raising the risk of a liquidity crunch in the crypto market.
