Trade War Pressures Crypto and Stocks, Boosts Gold
The ongoing trade war is causing a ripple affect in the financial markets. Both Bitcoin and stocks are feeling the heat as traders reassess their risk tolerance. According to a Binance report, the crypto market has lost a staggering $1 trillion due to fears of a US trade war. Traders are selling Bitcoin and flocking to gold as a safer option.
The Donald Trump governance has imposed a 10% tariff on all countries, effective April 5. Some regions face even higher rates: 34% on China, 20% on the EU, and 24% on Japan. The auto industry will also see an additional 25% duty. These tariffs have pushed average US import taxes to 18.8%, the highest since 1930.
As February 2025, the crypto market cap has fallen by 25.9%, or $1 trillion. Bitcoin is down 19.1%, and Ethereum has lost 40%. Memecoins and AI tokens have suffered even more, dropping over 50%.
Bitcoin’s performance is increasingly mirroring that of the S&P 500. The correlation has risen from –0.32 to 0.47, indicating that bitcoin is acting more like a risk asset than a hedge during market downturns.
Gold, however, is proving its worth as a safe haven.It has gained 10.3% as February,while its correlation with Bitcoin has dropped to –0.22. This divergence suggests that Bitcoin may not be as effective as “digital gold” as once thought.Institutions might be less likely to include Bitcoin in their portfolios as a defensive asset.
