Bitcoin Crashes Below $100K Amid Trump’s Trade War—Turning Point or Just the Beginning?

Bitcoin plummeted below the critical $100,000 threshold early Sunday as financial markets recoiled from President Donald Trump’s aggressive new trade policies. The sweeping tariffs imposed on Mexico, Canada, and China sent shockwaves through global markets, wiping out $200 billion in cryptocurrency value in just 24 hours. Every asset in the top 100 nosedived into the red, triggering widespread panic among investors.

Trade War Sparks Market Meltdown

The sell-off followed Trump’s surprise announcement of a 25% tariff on imports from Mexico and Canada, coupled with an additional 10% levy on Chinese goods. Justifying the move under the International Emergency Economic Powers Act, the administration cited an “extraordinary threat” stemming from illegal immigration and the fentanyl crisis.

Bitcoin, often hailed as a hedge against economic turmoil, initially remained resilient but ultimately succumbed to the broader risk-off sentiment gripping global markets. The sharp decline liquidated $540 million in leveraged positions, hitting traders who had bet on Bitcoin’s continued ascent.

Bloomberg Economics estimates that these tariffs will push U.S. average tariff rates to levels unseen since the 1940s. Canada and Mexico have vowed swift retaliation, with Canadian Prime Minister Justin Trudeau confirming $155 billion in counter-tariffs on U.S. goods.

Bitcoin’s Paradox: Hedge or Risk Asset?

While some analysts argue that escalating trade tensions could bolster Bitcoin’s long-term appeal, others warn that short-term liquidity shocks could keep prices under pressure. Rising tariffs fuel inflation concerns, prompting investors to seek alternative stores of value—an environment where Bitcoin could thrive.

“You simply have not yet grasped how amazing a sustained tariff war is going to be for Bitcoin in the long run,” tweeted Jeff Park, head of alpha strategies at Bitwise. He and other Bitcoin bulls argue that economic instability and currency devaluation will push more capital into decentralized assets.

Yet, skepticism remains. “In the short term, Bitcoin still trades as a risk-on asset,” said Nic Puckrin, CEO of Coin Bureau. “If markets keep collapsing, it could bring BTC down with it and end the current cycle.”

BitGalactic’s Take: A Defining Moment for Bitcoin?

At BitGalactic, we see this as a pivotal moment. Bitcoin’s reaction to geopolitical and macroeconomic pressures underscores its evolving role in global finance. Is it truly digital gold, or does it remain tethered to traditional risk-on sentiment? The coming weeks will provide crucial insights into Bitcoin’s resilience.

With uncertainty at an all-time high, one thing is clear: whether Bitcoin emerges stronger or struggles under market stress, the events unfolding today could reshape its narrative for years to come.