- Bitcoin dropped 3.97% to $76.5K as escalating U.S.-China trade tensions triggered a broader market selloff, wiping $186B from crypto markets.
- Ether plunged 8.36% to $1,454, marking one of its steepest daily losses this quarter amid fears of a prolonged trade war.
- The S&P 500 sank below 5,000, losing $5.8T in value in just four days, the worst rout in its history, highlighting growing investor risk aversion.
The crypto market faced a harsh correction in early Wednesday Asian trading, with Bitcoin and Ether tumbling sharply as tensions between the United States and China intensified. Mounting fears of a prolonged trade war rattled both traditional and digital asset markets, following the Trump administration’s aggressive move to enforce sweeping new tariffs.
Currently, Bitcoin (BTC) sank 3.97% to $76,531, while Ether (ETH) nosedived 8.36% to $1,454, marking one of Ether’s steepest daily declines this quarter. The broader cryptocurrency market saw $186 billion wiped out, with total market capitalization falling 7.2% to $2.4 trillion in the last 24 hours, despite isolated resilience among select altcoins.
The sharp downturn followed a 24-hour ultimatum issued by the White House, demanding China roll back its retaliatory 34% tariffs on U.S. goods. Failure to comply, the administration warned, would result in a staggering 104% import duty on Chinese exports to the U.S. The geopolitical brinkmanship has thrown markets into disarray, undermining what little hope remained for near-term de-escalation.
Risk assets reacted swiftly. All three major U.S. indices closed Tuesday in the red, with the S&P 500 breaching the critical 5,000 mark to close at its lowest level in nearly a year. Since Trump unveiled his global tariff framework just a week ago, S&P 500 companies have shed a jaw-dropping $5.8 trillion in market value, making it the worst four-day rout in the index’s history, per LSEG data.
Bitcoin Slides as CPI and Tariff Risks Shake Markets
While Bitcoin and other cryptocurrencies have often been lauded as hedges against systemic financial instability, recent market behavior paints a different picture. In times of heightened uncertainty, crypto assets have increasingly moved in lockstep with equities, especially high-growth tech stocks.
“This is no longer just about tariffs; it’s about a repricing of risk across all markets,” said Lukman Otunuga, senior market analyst at FXTM. “With Trump now threatening a further 50% tariff hike and Beijing showing no signs of yielding, markets are walking a tightrope, and crypto is no exception.”
The synchronized selloff across risk assets underscores the evolving macro narrative: in moments of global stress, even decentralized markets are not immune.
As if the trade war backdrop weren’t enough, traders now turn to Thursday’s U.S. Consumer Price Index (CPI) release, a key inflation gauge that could shape expectations for Federal Reserve policy in the coming months.
“A CPI print above 3.4% would be a red flag,” warned Marcin Kazmierczak, co-founder and COO of RedStone. “It could cement the view that inflation is stickier than expected and prompt a renewed wave of selloffs across both equities and crypto.”
On the flip side, a cooler-than-expected CPI, potentially below 3.2%, might provide a fleeting reprieve. Such a scenario could rein in inflation fears and temper the bearish momentum, possibly triggering a short-term bounce for Bitcoin and other digital assets.
Bitcoin Shows Strength as Ether Slips
Interestingly, Bitcoin has shown some relative resilience compared to Ether in recent sessions, fueling speculation that it may be starting to decouple at least partially from broader risk assets during periods of macroeconomic stress.
“Bitcoin is still seen by some as a long-term hedge, especially in a world of persistent inflation and geopolitical instability,” Kazmierczak added. “But in the short term, it’s still very much a risk asset and will likely follow the macro tide.”
As the world watches Washington and Beijing trade blows, and with inflation data looming, the next 48 hours could prove pivotal for global markets. For crypto investors, the question remains: is this a short-term storm or the beginning of a more prolonged risk-off cycle?
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