Trump's "Reciprocal Tariffs" Shock Crypto Market, Triggering Over 150,000 Liquidations and a Bitcoin Plunge of Over 7%

Trump's "Reciprocal Tariffs" Shock Crypto Market, Triggering Over 150,000 Liquidations and a Bitcoin Plunge of Over 7%The cryptocurrency market has experienced significant volatility recently, primarily due to the impact of Trump's "reciprocal tariff" policy. Bitcoin's price plummeted over 7% within 24 hours, falling from a high of $88,500 to a low of $82,100

Trump's "Reciprocal Tariffs" Shock Crypto Market, Triggering Over 150,000 Liquidations and a Bitcoin Plunge of Over 7%

The cryptocurrency market has experienced significant volatility recently, primarily due to the impact of Trump's "reciprocal tariff" policy. Bitcoin's price plummeted over 7% within 24 hours, falling from a high of $88,500 to a low of $82,100. At the time of writing, Bitcoin is trading at $83,605.8, down 1.73%. This sharp decline exacerbated market turmoil, resulting in over 150,000 liquidations totaling $478 million.

The market shakeup wasn't limited to Bitcoin. Ethereum (ETH) dropped 3.29% to $1,817.91, Dogecoin (DOGE) fell 4.82% to $0.16388, while SOL, XRP, and SUI experienced declines of 6.17%, 4.17%, and 5.46%, respectively. Coinglass data reveals that over 150,000 cryptocurrency traders were liquidated in the past 24 hours, with total losses reaching $478 million$260 million in long positions and $218 million in short positions.

The primary catalyst for this market upheaval is Trump's "reciprocal tariff" executive order signed on April 2nd. This order imposes a 10% "minimum baseline tariff" on trading partners, with higher tariffs levied on certain countries. This action triggered significant global capital market volatility and a surge in risk-averse sentiment.

The White House document outlines a two-phased implementation: a 10% baseline tariff effective April 5th, and higher reciprocal tariffs starting April 9th. These rates vary by country, including 49% for Cambodia, 46% for Vietnam, 36% for Thailand, 32% for Indonesia, 31% for Switzerland, 30% for South Africa, 26% for India, 25% for South Korea, 24% for Japan, 20% for EU member states, 10% for the UK and Brazil.

The high tariffs propelled gold prices to record highs, while cryptocurrency, as a risk asset, suffered investor sell-offs, leading to substantial price drops. Coinmarketcap data shows a net outflow of $8.6 billion from cryptocurrency ETFs on Wednesday, with Bitcoin ETFs experiencing a net outflow of $8.7 billion. QCP Capital analysis suggests that risk assets will remain under pressure in the short term, with the U.S. potentially marginalized by global markets due to the tariff policy, while other national stock indices may rise.

While a potential 2.5 rate cuts are anticipated by 2025, weak consumer confidence and tariff-induced inflationary pressures place the Federal Reserve in a "stagflation-like" predicament, potentially leading to a wait-and-see approach or even further rate hikes. Crypto market sentiment remains subdued, with Bitcoin struggling to break out of its sideways trend. Many tokens have experienced year-to-date declines of up to 90%, lacking macroeconomic improvement and catalysts for a rebound.

CICC (China International Capital Corporation) notes that the magnitude of Trump's announced "reciprocal tariffs" exceeded market expectations. If fully implemented, the effective U.S. tariff rate would jump from 2.4% in 2024 by 22.7 percentage points to 25.1%, surpassing levels seen after the 1930 Smoot-Hawley Tariff Act, intensifying market uncertainty and concerns, and further exacerbating the risk of U.S. economic stagflation.

While these tariffs could generate over $700 billion in revenue for the U.S., the threat of stagflation might prevent the Federal Reserve from cutting interest rates in the short term, increasing the risk of economic downturn and downward pressure on markets. This worsening macroeconomic environment significantly negatively impacts the cryptocurrency market, further eroding investor confidence in risk assets and accelerating sell-offs.

This event underscores the high volatility and risk inherent in the cryptocurrency market. Cryptocurrency prices are highly susceptible to macroeconomic factors, necessitating cautious investment and close monitoring of market dynamics and policy changes. Future market direction remains uncertain, requiring investors to rationally assess risk and make prudent decisions. The long-term impact of Trump's "reciprocal tariff" policy remains to be seen, with its effects on the global economy and cryptocurrency markets expected to continue unfolding and potentially triggering a series of chain reactions.

Currently, market sentiment is low, with investors predominantly adopting a wait-and-see approach. The cryptocurrency market is likely to face considerable pressure in the short term. Given global economic uncertainty, investors should prioritize monitoring macroeconomic conditions and align their investment decisions with their risk tolerance. Diversification and avoiding excessive concentration of risk are prudent strategies in the current complex market environment.

In conclusion, Trump's "reciprocal tariff" policy has significantly impacted the global economy and the cryptocurrency market, causing intense volatility and widespread liquidations. Investors must closely monitor market dynamics, rationally assess risk, invest prudently, and prepare for market fluctuations. Future market trends will depend on various factors, including the ultimate implementation of the tariff policy, the Federal Reserve's monetary policy, and the overall performance of the global economy. Continuously monitoring these factors is crucial for making informed investment decisions. Until clear positive signals emerge, the market is likely to remain volatile.

Edited by: Du Yan

Proofread by: Joey

Produced by: Xiao Mo

Reviewed by: Mu Yu

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