The evolving relationship between Bitcoin and traditional financial markets is under renewed pressure as global investors flee risk assets amid intensifying US trade tensions. US-listed spot Bitcoin (BTC) exchange-traded funds (ETFs) recorded their fourth consecutive day of outflows on April 8, with more than $326 million in net redemptions across products, according to data from Farside Investors.
BlackRock’s iShares Bitcoin Trust ETF (IBIT) saw the largest sell-off of over $252 million, marking its biggest daily outflow since February 26.
Bitcoin ETF flows, US dollars, millions. Source: Farside Investors
The selling pressure follows US President Trump’s April 2 announcement of sweeping reciprocal import tariffs, which triggered a historic $5 trillion wipeout in the S&P 500 over two days. This unprecedented market reaction raises concerns about the stability of both traditional and digital assets.
According to Lennix Lai, global chief commercial officer at OKX exchange, the delayed crypto market turbulence after the tariff announcement highlights Bitcoin’s evolving relationship with traditional markets. Lai noted that, despite a 26% drop since January’s inauguration, Bitcoin’s relative resilience during the initial post-tariff period—falling only 6% compared to Nasdaq’s 11% decline—suggests a nuanced dynamic between crypto and conventional assets.
Bitcoin initially remained firmly above the $82,000 support level but plummeted below $75,000 on Sunday, April 6. Some industry leaders attributed this sell-off to Bitcoin’s 24/7 liquidity mechanics, which positioned Bitcoin as the only large liquid asset available for de-risking over the weekend.
Bitcoin Remains Tied to Global Liquidity Conditions
While there are encouraging signs of a weakening correlation between Bitcoin and equities, Bitcoin’s price trajectory remains closely tied to global liquidity conditions. Lai cautions that despite early signs of divergence, Bitcoin fundamentally remains linked to these liquidity conditions, advising caution amid potential market stresses.
“What’s most significant here isn’t just price action but Bitcoin’s growing conceptual influence,” Lai added. “People increasingly view it as a valid strategic reserve asset for diversification in chaotic traditional markets.”
Other analysts share the sentiment that the growing money supply is Bitcoin’s main catalyst. Arthur Hayes, co-founder of BitMEX, commented that Bitcoin’s trading is closely aligned with market expectations for future fiat supply, highlighting the importance of understanding macroeconomic factors in the ongoing developments of the cryptocurrency market.
Magazine: Bitcoin ATH sooner than expected? XRP may drop 40%, and more: Hodler’s Digest, March 23 – 29
