Bitcoin and other major cryptocurrencies fell sharply on Monday as renewed trade tensions stemming from U.S. President Donald Trump’s latest tariffs on China, Canada, and Mexico triggered a broader risk-off sentiment in global markets.
The world’s largest cryptocurrency dropped nearly 4% to $96,038.0 as of 04:32 ET (09:32 GMT). The decline came as investors reassessed their positions in risk assets following Trump’s decision to impose tariffs, particularly a 25% duty on Canadian and Mexican imports and a 10% tariff on Chinese goods.
Bitcoin’s sell-off may appear counterintuitive, given its reputation as an inflation hedge. However, the latest macroeconomic developments have complicated the cryptocurrency’s near-term trajectory.
According to analysts at Bernstein, the new tariffs have strengthened the U.S. dollar and raised inflation expectations, making immediate Federal Reserve interest rate cuts less likely. This shift has led to tighter global liquidity, affecting all risk assets, including cryptocurrencies.
“In the short term, Bitcoin and crypto markets correlate with risk assets. Particularly during weekends, crypto serves as a barometer of risk sentiment. The crypto sell-off is not surprising given the broader market uncertainty,” noted Bernstein analysts led by Gautam Chhugani.
Despite the current volatility, analysts maintain that Bitcoin has a long-term compounding history that underscores its value proposition. As governments accumulate more debt and deficits, concerns over monetary debasement continue to drive institutional interest in Bitcoin.
Bernstein notes that Bitcoin has consistently held support in the high $90K range, suggesting strong demand at current levels. The bank also highlighted the significant institutional adoption of Bitcoin, particularly through spot Bitcoin ETFs, which recorded a net inflow of $5.3 billion in January 2025. This aligns with their annual forecast of approximately $70 billion in inflows, reinforcing Bitcoin’s role as a store of value over time.
While Bitcoin remains highly correlated with risk assets in the short term, analysts believe that the cryptocurrency will eventually decouple from traditional markets. However, they caution that Bitcoin is unlikely to act as a safe haven unless there is a broader flight from fiat currencies.
Looking ahead, investors will closely monitor macroeconomic developments, Federal Reserve policies, and institutional inflows to gauge Bitcoin’s next move. The cryptocurrency market remains volatile, but its long-term fundamentals continue to attract institutional and retail investors alike.
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