As Trump's Tariff Escalation Causes panic, Bitcoin and Global Markets Drop

April 7, 2025 – Growing trade tensions between the United States and China are causing a widespread sell-off that has markets all over the world, including the cryptocurrency space, reeling. Fears of a worsening trade war caused Bitcoin and other cryptocurrency-related stocks to plummet Monday, joining traditional stocks in a sharp decline.

Amid Market Turbulence, Bitcoin Drops Below $77,000.

Monday morning saw Bitcoin continue its downward trajectory, briefly hitting $76,000, a significant drop from its February peak of over $100,000. Due to investor flight from riskier assets due to global economic uncertainty, the largest cryptocurrency in the world has now lost almost 25% of its value.

The cryptocurrency equity market did the same. A significant institutional Bitcoin holder, MicroStrategy (MSTR), saw a 12% decline in its stock price. Major cryptocurrency mining companies Riot Platforms (RIOT) and Mara Holdings (MARA) suffered comparable losses to Coinbase (COIN), which fell 9%. As the panic swept through the fintech and tech industries, trading platform Robinhood (HOOD) fell more than 10%.

Trump Remains Firm: Talks End, Tariffs Will Increase

President Donald Trump's announcement of broad new tariffs on Chinese imports set off the sell-off. Wall Street was becoming increasingly alarmed, but the administration didn't appear to be changing course. Trump threatened via Truth Social on Monday morning that the United States would impose an additional 50% tariff on all Chinese goods beginning April 9 unless China reversed its retaliatory tariffs.

“All talks with China concerning their requested meetings with us will be terminated!” Trump declared.

This intensification came after Beijing imposed a 34% tariff on all U.S. imports on Friday in retaliation, a move that many investors hoped would spark talks rather than more conflict.

Markets on the Verge of Bear Territory, Stocks Plunging

It has had a devastating effect on U.S. stocks. Monday's 1.8% decline in the S&P 500 brought it dangerously close to bear market territory, which is characterized by a 20% decline from recent highs. The index was down over 20% at its lowest point of the day.

Following last week's historic back-to-back 1,500-point losses, the Dow Jones Industrial Average fell 916 points (2.4%). With a 1.7% decline, the Nasdaq Composite, which is primarily composed of tech stocks, continued its descent into bear market territory and is currently 23% below its peak.

Short-lived market rallies, such as the S&P 500's brief 7% increase during morning trading, were swiftly put an end to after the White House called rumors of a potential 90-day tariff delay "fake news."

Global Contagion: European and Asian Markets Collapse

The consequences extended beyond the United States. The increased trade rhetoric also caused global markets to tremble. The Hang Seng Index in Hong Kong fell 13%, the most since the Asian financial crisis of 1997. Losses on major indices in Tokyo, Taipei, and Shanghai ranged from 7% to 10%.

The markets in Europe also suffered. Germany's DAX Index fell as much as 10% during intraday trading, while the Stoxx Europe 600 fell more than 4%.

As investors balanced worries about slowing growth and fresh inflationary pressure, U.S. Treasury yields fluctuated, and the price of oil fell below $60 per barrel, reaching multiyear lows. Often referred to as Wall Street's "fear gauge," the CBOE Volatility Index (VIX) jumped above 50, a level infrequently observed outside of bear markets.

Crypto and Risk Assets in the Crossfire

Digital assets like Bitcoin are growing more and more linked to conventional equities, especially tech stocks and speculative instruments, as macroeconomic uncertainty increases. Bitcoin was once thought to be a hedge against political unrest and inflation, but as global deleveraging continues, institutional players are now treating it as a risk asset.

The sell-off has accelerated as a result of hedge funds being forced to liquidate positions in both traditional and digital markets due to alleged margin calls. Analysts caution that the volatility may persist throughout the week unless geopolitical tensions subside.

Wall Street’s Growing Concerns

Now, well-known investors are raising their concerns about what they perceive to be a careless escalation. Bill Ackman, a billionaire hedge fund manager, referred to the situation as a "economic nuclear winter" and urged the administration to change its position.

"This is not what we voted for... the president is losing the trust of business leaders worldwide," Ackman posted on X (formerly Twitter).

The European Union and Canada are allegedly preparing their own retaliatory tariffs, despite reports that over 50 nations have approached the United States for tariff negotiations. U.S. trade advisor Peter Navarro rejected Vietnam's offer to eliminate tariffs on American goods, saying that "non-tariff cheating" is still the true problem.

Looking Ahead: What Traders Should Watch

As the trade war intensifies, investors should monitor:

Over the next 48 hours, the White House and China will make official announcements.
The price movement of bitcoin around the $75,000 support level
Cryptocurrency and tech stock volatility
Central bank reactions and global economic indicators
Additional responses from important market leaders and trading partners

Retail and institutional investors are preparing for more volatility in what may turn out to be one of the most volatile trading weeks of 2025, as markets are tense and uncertainty is at an all-time high.

Stay updated with the latest market developments and crypto news at World Trade.

‍