Crypto market cap sheds $1 trillion as Bitcoin tracks risk assets
Crypto market cap sheds $1 trillion
The cryptocurrency market has lost over $1 trillion in value amid growing concerns over a global trade war sparked by sweeping US tariffs.
According to a recent report from Binance, the Biden administration’s imposition of a 10% blanket tariff—effective April 5—has triggered a sharp reassessment of risk across financial markets, pushing investors away from crypto assets and into traditional safe havens like gold.
The move includes steeper levies for key trade partners: 34% on China, 20% on the European Union, and 24% on Japan. Industries such as automotive manufacturing are particularly affected, now facing a 25% sector-specific tariff.
These measures have pushed average US tariffs to 18.8%, the highest since the Smoot-Hawley Tariff Act of 1930, according to Crypto News.
Bitcoin's risk profile under scrutiny
Since February, the total crypto market capitalization has plunged by 25.9%, with Bitcoin (BTC) down 19.1% and Ethereum (ETH) dropping nearly 40%. More speculative segments—such as memecoins and AI-linked tokens—have lost over 50%.
Notably, Bitcoin’s correlation with the S&P 500 has surged from –0.32 to 0.47, signaling that investors increasingly treat it as a risk asset, not a hedge. In contrast, gold has gained 10.3% over the same period, reaffirming its traditional role as a safe store of value amid economic uncertainty. Its correlation with Bitcoin has fallen to –0.22.
The divergence casts doubt on Bitcoin’s long-touted identity as “digital gold.” As inflation expectations climb to an annual rate of 3–5%, institutional investors may reevaluate the asset’s role in defensive strategies.
The shift in sentiment underscores a broader rebalancing as global markets adapt to an era of rising protectionism and economic fragmentation.
Meanwhile, the cryptocurrency market may soon face a short-term downturn due to weakening institutional demand for Bitcoin and Ethereum futures on the Chicago Mercantile Exchange (CME), according to analysts from investment bank JPMorgan.
