Crypto Market Extends Losses as Tariff Shock Deepens

The crypto market is under sustained pressure this morning following a weekend of deepening macroeconomic turmoil, triggered by escalating U.S. trade policies and a brutal rout in traditional markets.

Bitcoin fell as low as $77,200, marking a 27% drawdown from its all-time high of $107,000 in December 2024. Ethereum fared even worse, down 12.72% in the past 24 hours to $1,576, as liquidations and institutional outflows accelerated across the complex. The global crypto market cap currently sits at $2.5 trillion, down 6.41% day-on-day.

The weekend’s steep losses came after the largest 48-hour stock market wipeout since the COVID panic, with $5.4 trillion in equity value erased. The S&P 500 closed down 6%, while the Nasdaq 100 fell 5.8%, both officially entering bear markets. Risk aversion spilled into Asia this morning, with index futures sliding over 5% and crude oil breaking below $60 a barrel for the first time since 2021.

The selloff was initially sparked by U.S. President Donald Trump’s sweeping 10% blanket tariff policy on all imports, with added penalties for trade surplus nations. Speaking on over the weekend, Trump doubled down on his position, stating: "My policies will never change. This is a great time to get rich—richer than ever before!" To the many investors coming into the United States and investing massive amounts of money: hang tough, we can’t lose!"

Despite his bullish tone, the impact on markets has been severe. Trump brushed off criticism over the downturn, saying : "I don't want anything to go down. But sometimes you have to take medicine to fix something."

He also reaffirmed that no deal with China would be made unless the U.S. trade deficit is resolved, adding: "Some day people will realize that tariffs, for the United States of America, are a very beautiful thing!"

Fed Chair Jerome Powell, speaking late Friday, acknowledged the scale of the disruption: "The impact of tariffs on the economy may be greater than expected... Uncertainty is high. We will wait for greater clarity before further adjustments."

This cautious stance from the Fed further unsettled markets, as traders rapidly revised their rate expectations. Fed futures now fully price in a rate cut in June—moved up from July—and assign a 50% probability of a fourth rate cut by December. Bond markets echoed the fear, with the 10-year U.S. Treasury yield falling below 4% for the first time since October.

JP Morgan economists cut their U.S. growth outlook sharply, warning: "We now expect real GDP to contract under the weight of the tariffs... for the full year we now look for real GDP growth of -0.3%, down from 1.3% previously."

With volatility elevated and risk-off flows in full swing, traders are bracing for more pain, but also eyeing the eventual policy pivot. Until then, markets remain hostage to headline risk, and crypto is no exception.