Bitcoin took a sharp dive to $81,000 after hitting highs of $88,000 during President Donald Trump's latest tariff announcement. The market initially reacted positively to the news of a 10% baseline tariff on all imports, as it was lower than many had anticipated. However, just minutes later, Trump revealed additional higher tariffs on specific countries, causing markets—including Bitcoin—to reverse sharply.
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Trump's "Liberation Day" Tariffs Shake Markets
Trump on Wednesday announced sweeping reciprocal tariffs, branding the move as "Liberation Day." The policy imposes a 10% baseline tariff on all imports to the U.S., but many nations will face significantly higher rates based on how they tax U.S. goods.
For instance:
- China will face a 34% tariff under the new policy.
- Vietnam (46%), Taiwan (32%), Switzerland (31%), and India (26%) will all see much higher import duties.
- Some of the steepest tariffs are hitting Cambodia (49%), Bangladesh (37%), and South Africa (30%).
Trump justified the move as a way to erase America's trade deficit and protect U.S. manufacturers. However, economists warn that the policy could lead to inflation and a global trade war, as other nations are likely to retaliate with tariffs on American goods. Moody's Analytics chief economist Mark Zandi cautioned that extended tariffs could push both the U.S. and its trading partners into recessions.
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Bitcoin's Reaction: From Relief to Sell-Off
When Trump first announced the 10% across-the-board tariff, markets breathed a sigh of relief, as many expected harsher measures. This initial reaction pushed Bitcoin to $88,000. However, as Trump unveiled additional tariffs with higher rates on major trade partners, concerns over inflation and economic uncertainty sent risk assets tumbling—dragging Bitcoin down to $81,000.
The Potential Bitcoin Reversal
As discussed in a previous article, Bitcoin has been showing relative strength compared to the stock market.
On Friday, Bitcoin closed in the green, while U.S. stock indices experienced one of their worst days since 2020.
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Screenshot Courtesy of TradingView User NoticeTrades (April 3)
As seen on the chart below, Bitcoin has held up relatively well despite the high volatility of the past two weeks.
The bull case on the chart for Bitcoin is that the “divergence” continues to hold, meaning Bitcoin does not make a lower low below $76,560.
Within the next few weeks, as volatility eases, it should become clear whether Bitcoin is poised for a new run back up toward key upside price levels.
Screenshot from Godel Terminal
It’s important to remember that just because a market shows strength doesn’t mean it will move higher.
If U.S. equities continue to decline, Bitcoin will likely follow that trend, though its percentage drop may be smaller compared to previous instances.
The key data points to monitor for a potential Bitcoin reversal to the upside include its relative strength compared to the S&P 500 and Nasdaq, the technical price levels mentioned—one being the major swing low of $76,560—and Bitcoin’s reaction if the overall markets experience a short-term bounce.
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