The price of Bitcoin has fallen over 15% from February 3, particularly after US President Donald Trump’s announcement of tariffs against China, Mexico, and Canada.The currency, which had a record $91,000, fell to about $86,400 by March 5.Let’s discuss why Bitcoin is selling off after this news.
Economic Uncertainty Reduces Risk Appetite
As Trump threatened to tariff Canada, Mexico, and China, it worried about supply chains being disrupted and prices going up, inducing worries of economic contraction, or a “Trumpcession.” Investors yank funds from volatile assets like Bitcoin during uncertainty, as happened in previous trade wars such as the one during 2019, when Bitcoin rocketed upward as the equities market tumbled. But this time around, Bitcoin is acting like a risk asset, and it has become more correlated with stocks, hence its decline with them.
Bitcoin Volatility Outlook: March 5-6
— News Impact Price (@newsImpactprice) March 5, 2025
After former President Trump's announcements and the subsequent tariff decisions on Mexico and Canada, Bitcoin's price has returned to relative equilibrium. However, today's volatility could be influenced once again by updates regarding… pic.twitter.com/5E3P5bzQ8m
Bitcoin Trades 24/7
Unlike most other markets that close over the weekend, Bitcoin is available to trade 24/7.When Trump’s tariffs were unveiled over a weekend, traders acted quickly, selling their Bitcoin before the stock market even opened. This dropped Bitcoin’s price sharply, as traders were trying to unload their exposure to the cryptocurrency before the rest of the market had time to react.
Global Investors Seek Safe Havens
Usual tariffs are supposed to strengthen the US Dollar since they cut down on imports. This time, however, the US Dollar Index (DXY) dropped after Trump announced tariffs, which was followed by a rebound of the euro and gold. This shows that investors are fleeing to safer assets like the euro or gold instead of Bitcoin. Bitcoin is not so much considered a safe asset as the anxiety over a reduced rate of economy picks up, and investors hedge elsewhere.
