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Cryptocurrencies extended their decline this week as mounting global trade tensions and fears of prolonged tariffs sent shockwaves through risk assets. Bitcoin (BTC) and Ether (ETH), often touted as alternative hedges, failed to escape the market-wide pullback.
As of Tuesday morning, Bitcoin was down over 4% on the week, slipping below the $65,000 mark, while Ether fell nearly 6%, trading under $3,200. The sell-off mirrors broader market unease triggered by escalating tariff rhetoric between major economies, particularly the U.S. and China, which has reignited concerns of a prolonged trade war.
“Investors are moving to cash and traditional safe havens like gold and the U.S. dollar,” said a market strategist at a London-based crypto hedge fund. “Crypto is still perceived as high-beta, and in risk-off environments, it gets sold off.”
From Inflation Hedge to Risk Asset
While Bitcoin and Ether have been embraced by some as digital gold or inflation hedges, recent price action suggests they continue to behave more like tech stocks—reacting sharply to shifts in macroeconomic sentiment. Analysts note that as institutional adoption grows, crypto is increasingly influenced by the same risk factors that drive traditional markets, including interest rates, global trade flows, and monetary policy.
“The narrative of Bitcoin as a safe haven is being tested,” said a senior analyst at an asset management firm. “It’s still in the early stages of gaining that kind of reputation—it’s not there yet.”
Tariff Talk Fuels Uncertainty
The current market jitters stem from renewed tensions between the U.S. and China, with both sides signaling potential for increased tariffs on key sectors including technology, semiconductors, and energy. This has raised fears of inflationary pressures and global supply chain disruptions—both of which add uncertainty to an already fragile economic outlook.
For crypto markets, this could mean continued volatility. With central banks maintaining a cautious stance and liquidity tightening in traditional finance, digital assets are finding fewer buyers willing to weather short-term swings.
Despite the recent slide, some remain optimistic about crypto’s long-term outlook, especially as upcoming upgrades (like Ethereum’s Dencun rollout) and Bitcoin ETF flows continue to underpin fundamental demand.
However, in the short term, traders may need to brace for more turbulence.
“We’re in a macro-driven market,” said the head of trading at a major crypto exchange. “Until the broader economic picture improves, crypto won’t be immune.”
