Introduction
Bitcoin and the cryptocurrency market saw a sharp correction on April 2nd after President Donald Trump announced reciprocal tariffs, triggering significant volatility across financial markets.
Immediately following the announcement, Bitcoin dropped by around 2%, hovering around $83,000, down from nearly $88,000 just before Trump unveiled his trade policies late in the afternoon. Risk assets, including cryptocurrency stocks, were also heavily impacted in after-hours trading, with many crypto-related stocks seeing sharp declines.
Crypto Market Volatility Following Trump’s Tariff Announcement
Trump officially announced reciprocal tariffs, applying to a wide range of countries, including major U.S. trade partners. The tariffs range from 10% to 50%, depending on the country. The measures include a 10% baseline tariff on imports and 25% on foreign-made automobiles.
Crypto-related stocks experienced significant impacts in after-hours trading. MicroStrategy (MSTR), the large Bitcoin buyer, dropped by around 7%. Major cryptocurrency exchanges like Coinbase (COIN) and Robinhood (HOOD) also saw declines of 6% and 9%, respectively.
Tariff Announcement Shock Causes Market Drop
According to experts, Trump’s announcement created a massive shock in the market. Bitcoin dropped as much as 4%, falling to $82,000 on the morning of April 3rd, before partially recovering. Other cryptocurrencies like Ethereum (ETH), XRP, and Solana (SOL) also saw significant declines.
Trump stated that he would impose a minimum 10% tariff on all exporters to the U.S. and additional tariffs on about 60 countries with the largest trade imbalances with the U.S. China will face a 34% tariff, the European Union 20%, and Japan 24%. Although the cryptocurrency market initially reacted relatively well, it began to weaken as Asian traders started their day.
Ripple Effect Across Global Financial Markets
The volatility did not only affect the cryptocurrency market but also spread to traditional financial markets. The S&P 500 index dropped 3.7%, wiping out $2 trillion from its market cap. The U.S. stock market also experienced sharp declines, with risk assets like gold and tech sectors being affected.
Analysts predict that the market will continue to experience volatility in the short term. “The initial ‘shock’ could increase volatility, but it will be a short-term effect,” Arthur Azizov, Founder of B2 Ventures, shared. “Much will depend on how quickly the market adjusts to major changes in the future.”
Conclusion
Given the significant market fluctuations following the tariff announcement, cryptocurrency investors will need to closely monitor macroeconomic factors in the coming period. The $80,000 level for Bitcoin will be a crucial point to watch, as global political and economic developments may continue to strongly impact the cryptocurrency market moving forward.
