Trump Tariffs Spark $800M Crypto ETF Rout: Can The Macro Narrative Shift?

With worries of a worldwide economic slowdown growing in the aftermath of sweeping U.S. tariffs, cryptocurrency ETFs are feeling the brunt.

What Happened: Monday saw an intense sell-off in major crypto ETFs, following a broader drop in digital assets and risk-on markets provoked by President Donald Trump‘s “Liberation Day” tariffs.

The aftermath came quickly: Bitcoin dropped below $75,000, and is currently just over $78,000. Ethereum recorded double-digit declines. More than $800 million was liquidated in 24 hours, per QCP Capital, as investors hurried to cover themselves as volatility spiked—BTC’s implied volatility rose above 85v, and Ethereum jumped to 130v.

Among the largest losers since Trump’s so-called “Liberation Day” were three of the most well-known crypto-linked ETFs:

iShares Bitcoin Trust ETF IBIT declined by 10.4% since April 2. IBIT, a spot Bitcoin ETF, directly mirrors the underlying commodity’s price action. Its drawdown represented wide-based selling pressure from both institutional and individual investors. Earlier this year to widespread publicity, this ETF first started, with subsequent steady inflows. Now that momentum is in reverse because of macro headwinds.

iShares Ethereum Trust ETF ETHA declined the most, losing 19.6%. Ethereum’s increased susceptibility to hype—particularly surrounding AI, DeFi, and Layer-2 narratives—exposed ETHA the most as speculators withdrew from high-beta players. ETHA also has narrower volumes than its Bitcoin equivalent, which increases risk of loss on the downside in panics.

CoinShares Valkyrie Bitcoin and Ether Strategy ETF BTF declined 14.5% during the same period. This actively managed futures exchange-traded fund that wraps up exposure to both Bitcoin and Ethereum derivatives got in the middle of both declining assets. With futures contracts already factoring in increased volatility, BTF was a victim of waterfall sell orders and de-risking.

Also Read: New ETFs Offer Bitcoin Exposure With Built-In Safety Nets

Why It Matters: Despite Trump’s renewed pressure on world tariffs—steps that analysts believe could strangle supply chains and cloud the economic horizon—the case for crypto ETFs remains intact.

Regulatory clarity, growing institutional interest, and continued infrastructure development could pave the way for broader adoption.

Andreas Brekken of SideShift.ai remains optimistic: "I'm still very bullish on BTC,” she said, noting that diplomatic breakthroughs could quickly reset the macro narrative.

Specifically, single-spot Bitcoin ETFs such as IBIT will stand to gain as safe-haven stories involving Bitcoin resurface—particularly when fiat confidence suffers or geopolitical turmoil intensifies.

While crypto ETFs can be under strain in the short to medium term, they also develop rapidly. As the sector weathers macro storms and meme-based manias dissipate, investors can increasingly consider ETFs not to be speculative bets but vital tools in the modern financial landscape.

As concerns about a trade-war-driven slowdown increase, crypto is following equities lower. Investors are dumping speculative positions first.

Unfazed is long-term ownership. Glassnode data indicate that more than 50,000 BTC are today being held close to the $74,000 level, of which most have been inactive since March—presumably serving as a psychological base.

What’s Next: While this current lull has shaken investor confidence, market analysts tell us that crypto ETFs will continue to generate renewed interest after stabilizing volatility.

Short-term forecasts are volatile. If the macro pressures keep going, and with the fresh set of tariffs announced for April 9 in sight, ETFs such as IBIT and ETHA won’t be able to regain their position. Traders might rather want to hang on to their liquidity than hold onto long-term positions.

In the medium term, additional weakness in crypto spot markets would bear down on ETFs. As B2BinPay analysts noted, the present chart patterns are similar to early 2022. That was a time that led to an 80% drawdown in Bitcoin.

Futures-based ETFs such as BTF could experience further volatility because of contango and roll costs.

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