This week marks the implementation of President Donald Trump’s baseline 10% trade tariffs, which has reverberated through global equity and cryptocurrency markets. The Dow Jones Industrial Average has seen a significant decline of over 9% in the past five days, while the total cryptocurrency market cap has shed approximately $150 billion in the same timeframe, heavily impacting altcoins.
Bitcoin Remains Resilient Despite Tariff Uncertainty
A recent report from Binance Research indicates that Bitcoin (BTC) has maintained a relatively robust position despite the heightened risk-off sentiment stemming from the tariffs. Notably, while BTC has experienced a decline of 19.1% since the tariff announcement, Ethereum (ETH) has faced a sharper drop of 44.1% during the same period.
Furthermore, other narrative-driven digital assets, such as memecoins and artificial intelligence (AI) tokens, have witnessed even more significant declines — plummeting 58.1% and 52.5%, respectively. In contrast, traditional safe-haven assets like gold have continued to ascend, achieving new all-time highs amid the growing macroeconomic uncertainty.
The recent imposition of trade tariffs has reignited discussions surrounding the correlation between Bitcoin and equity markets. Initially, the correlation between BTC and traditional assets was -0.32 when tariffs were first announced on January 23. However, following further tariff announcements, this correlation increased to 0.47 by March, indicating a temporary alignment of Bitcoin with broader market sentiments.
The report emphasizes that while Bitcoin’s correlation with traditional markets tends to spike during periods of acute stress, it usually diminishes as market conditions stabilize. Interestingly, the report also notes that Bitcoin has demonstrated “some signs of resilience” amidst the recent macroeconomic shocks.
In addition, long-term holders appear undeterred, continuing to accumulate Bitcoin even amid volatility. According to Binance Research, these investors exhibit strong conviction and minimal capitulation, suggesting that Bitcoin may be transitioning toward a more independent macro identity.
How Will BTC Fare In A Protectionist World?
Should Trump’s tariffs remain in effect, they could pose new challenges for the cryptocurrency market. Investor sentiment might weaken further, accompanied by escalating recession fears. Increasing import costs could potentially drive inflation higher, thus intensifying concerns around stagflation.
Conversely, a recession coupled with stunted economic growth might lead the US Federal Reserve to enact aggressive interest rate cuts and reintroduce quantitative easing. Such measures could favor risk-on assets, including Bitcoin.
Moreover, analysis from crypto analyst Titan of Crypto suggests a possible Bitcoin rally, as the global M2 money supply appears prepared for expansion. Historically, Bitcoin prices tend to rise in response to increases in M2, typically with a lag of about 70 to 107 days. As of now, BTC trades at $79,989, reflecting a 3.6% increase in the past 24 hours.
