BTC falls below 78,000: Where will the crypto market go under the impact of Trump's tariffs?

After Trump's tariff stick fell last week, the reaction of financial markets continued to ferment.

On April 7, 2025, the yield on the 10-year U.S. Treasury bond fell about 10 basis points to 3.904% in early trading. The three major A-share indices continued to fall, with the ChiNext Index falling 10%, the Shenzhen Component Index falling 8.3%, and the Shanghai Composite Index falling 6.6%. More than 860 stocks in the entire market fell to the limit. European stock index futures continued the decline last week, with the European STOXX 50 index futures falling 4.3%, the German DAX index futures falling 5.0%, and the British FTSE 100 index futures falling 4.1%. The Nikkei 225 Index and the Australian S&P/ASX200 Index fell further, with intraday declines of 6%, and the Nikkei 225 Index and the Topix Index futures were suspended after a sharp drop. Spot gold fell below $3,000/ounce for the first time since March 21, falling 1.28% on the day. The main stock indices in the Gulf region fell more than 5.5%, the biggest drop since 2020. Saudi Aramco's stock price plummeted by 6.2%, and its market value evaporated by more than $90 billion.

The stock market is bleak

The crypto market is not immune, and the crypto market is all red. Today, the Fear and Greed Index dropped to 23, and the level changed from fear to extreme panic. Many mainstream cryptocurrencies recorded double-digit declines: BTC is now at $78,973.52, a 24-hour drop of 5.4%. Three hours ago, it even fell below $78,000, with a low of $77,284.23.

ETH fell below the $1,600 mark, at $1,595.76, a daily drop of 11.9%. SOL was at $107.21, a daily drop of 10.9%.

Due to the particularly bleak ETH market, many whale positions were liquidated. According to the monitoring of on-chain analyst Ember, with this wave of decline, the whale position with a loan position liquidation line of 67,500 ETH (US$105 million) at US$1,650 was completely liquidated, which also contributed to the further decline of ETH. He actually added 2,160 ETH of collateral at 1 a.m. to lower the liquidation line, but ETH fell all the way, and his ETH position was finally liquidated at 6 a.m. to repay his 74.4 million DAI loan.

Another whale holding 57,000 ETH was almost liquidated at the same price as the 67,500 ETH position. Because he actively reduced his position a few days ago, he barely avoided risks. At present, his position is still on the edge of the liquidation line, and it is expected that he will need to continue to reduce his position to reduce risks.

1. Is Trump deliberately manipulating the market to sell?

Trump posted on his social platform that the United States has huge fiscal deficits with China, the European Union and other countries, and the only solution is to impose tariffs, which have now brought tens of billions of dollars in revenue to the United States. He criticized the widening of the U.S. trade deficit with the above-mentioned countries during the Biden administration and promised to quickly reverse the situation, reiterating that tariffs are "a very beautiful thing" for the United States.

As U.S. stock futures plummeted, Trump said that he did not deliberately manipulate the market to sell off, and he had talked with European and Asian leaders about tariffs. He also said that he could not predict what would happen in the market. When asked about the market performance, he said that sometimes the market must "take medicine."

U.S. Commerce Secretary Howard Lutnick said that the United States would not postpone the imposition of tariffs, and the "reciprocal tariffs" would take effect on April 9 and would last for several days. In addition, Lutnick said that the United States must include uninhabited islands where penguins "live" in the scope of tariffs to prevent certain countries from trying to take advantage of loopholes.

Kevin Hassett, director of the White House National Economic Council, said that the stock market crash was not a deliberate strategy by President Donald Trump. Earlier, Trump shared a video link on his social media platform "Real Social" that claimed that the president deliberately caused the market to plummet as part of his broader economic plan. When repeatedly asked whether Trump deliberately orchestrated the market sell-off, Hassett responded: "He's not trying to crash the market. He's trying to do good for American workers." Hassett said: "It's not the (government's) strategy to crash the market."

Asset manager Anthony Pompliano recently speculated that the US president is deliberately crashing the capital markets to force him to cut interest rates and reduce the cost of repaying US Treasury bonds.

The 10-year US Treasury bond rate has been falling since the start of Trump's second term. Source: TradingView

2. How do other countries respond to the tariff stick?

The British government said that British Prime Minister Starmer spoke with Canadian Prime Minister Carney. Both sides agreed that it is vital to maintain free and open trade between like-minded countries. Prime Minister Carney reiterated Canada's commitment to play an active role in the "coalition of the willing". The two leaders also discussed how to work together to maintain global economic stability after the US announced relevant measures. The British government stressed that a full-scale trade war is not in anyone's interest, and Prime Minister Starmer and Prime Minister Carney reached a consensus on this.

The European Commission announced that on the same day, European Commission President von der Leyen spoke with British Prime Minister Starmer to discuss trade issues. During the call, von der Leyen pointed out that the tariff measures announced by the Trump administration on April 2 will harm all countries in direct and indirect ways, including affecting the world's poorest countries. Von der Leyen said that these tariff measures mark a major turning point in US policy. She said that while the EU remains committed to negotiations with the United States, if necessary, the EU is ready to defend its interests through corresponding countermeasures.

EU countries will seek to form a united front in the coming days to fight back against Trump's tariffs. The EU may approve the first set of targeted countermeasures against US imports worth up to $28 billion, such as dental floss and diamonds. The European Commission will present to member states later on Monday a list of US products hit by additional tariffs in response to Trump's steel and aluminum tariffs, rather than broader reciprocal tariffs. Luxembourg will host the first EU-wide political meeting early on Monday since Trump announced comprehensive tariffs, when ministers responsible for trade in the 27 EU member states will exchange views on the impact of tariffs and how best to respond. EU diplomats said the main purpose of the meeting was to convey a consistent message that they hoped to negotiate with the United States on the removal of tariffs, but were prepared to take countermeasures if the negotiations failed.

3. Will the tariff policy affect the lives of the American people?

In response to the latest tariff policy announced by the United States, the BBC, the Associated Press and other reports said that the new tariff policy of the United States will push up the prices of almost all daily necessities for the American people, especially clothing and food, and harm the interests of American consumers and businesses. The Yale University Budget Lab previously analyzed that the US tariff policy may cause the overall inflation rate in the United States to rise by 2.3% this year, which is equivalent to a loss of $3,800 for each ordinary American family.

Hassett, director of the White House National Economic Council, believes that "tariffs will lead to lower consumer prices in the United States."

Former US Treasury Secretary Lawrence Summers disagrees with Hassett's statement. He believes that US President Trump's tariff policy is the biggest self-inflicted wound ever inflicted on the US economy. Summers said that tariffs will lead to rising prices, exacerbating the inflation rate, and thus reducing people's consumption capacity, which also means a reduction in employment opportunities.

4. What do industry insiders think of this market decline?

In an interview with CBS, U.S. Democratic Senator Bernie Sanders said that the United States under Trump is facing "unprecedented danger" and is rapidly moving towards oligarchy. He said this means that the U.S. government is being managed by and for the billionaire class.

Arthur Hayes, co-founder of BitMEX, posted on the X platform that a large part of Trump's supporters do not hold a large amount of financial assets. He believes that those who do not hold stocks have a clear gloating mood towards those who hold stocks, so Trump can firmly promote tariff policies and be confident that this position is still widely popular among his core voter groups. . . . Tariffs will make U.S. Treasuries and U.S. stocks no longer exist as global reserve assets. . . For those who want to adapt to restore pre-1971 trade relations, buy gold, gold miners and BTC. . . . BTC holders need to learn to like tariffs, maybe we finally break the correlation with Nasdaq and can move to the purest form of fiat liquidity smoke alarm.

Goldman Sachs cuts its Q4 2025 US GDP growth forecast to 0.5% and raises its 12-month recession probability from 35% to 45% due to sharply tightening financial conditions, foreign consumer boycotts, and continued spikes in policy uncertainty, which could depress capital spending more than we previously assumed.

Traders at Kalsh prediction market see a 61% chance of a US recession in 2025.

Simon Gerovich, CEO of Metaplanet, a Japanese listed company, tweeted, "On days when Bitcoin falls, it's easy to focus only on price. But this can be a moment to test and cultivate conviction. Volatility is also a natural aspect of truly rare, diversified assets with long-term potential. Keep an open mind, understand how it works, and keep learning."

Gold advocate and economist Peter Schiff commented on Riot Platforms Vice President Pierre Rochard's view that "ETH/BTC has fully retreated, challenging the view that new cryptocurrencies can surpass Bitcoin due to higher utility." "All tokens, including Bitcoin, have no real value, which is why their prices have fallen sharply."

Bitwise analyst Jeff Park said that US President Donald Trump's trade policy will trigger global macroeconomic turmoil and short-term financial crises, which will ultimately lead to wider adoption of Bitcoin as a store of value asset. “The cost of tariffs will likely be borne through higher inflation, which will be shared by the United States and its trading partners, but foreign countries will be much more affected in relative terms. These countries will have to find a way to fend off weak economic growth.”

Author and financial commentator Holger Zchaepitz summarized in X’s response: “The tariffs announced by Trump this week have wiped $8.2 trillion off the value of the stock market – more than the losses in the worst week of the 2008 financial crisis.”

“The only real circuit breaker for Asian stocks has been President Trump’s comments, and there is little sign that the market sell-off has bothered him enough to make him reconsider the policy positions he has believed in for decades,” said Sean Callow, senior foreign exchange analyst at ITC Markets in Sydney. Investors had previously believed that the loss of trillions of dollars in wealth and the potential damage to the economy would make Trump reconsider his plans.

Bitcoin supporter Max Keiser even predicted that BTC would reach $220,000 by the end of the month. "A 1987-style super crash will push Bitcoin to $220,000 this month as trillions of wealth seek the ultimate safe haven: Bitcoin."

Famous trader Daan Crypto Trades: "BTC volatility is getting lower and lower, while the stock VIX (volatility index) has closed at its highest level since the 2020 COVID-19 crash." "This is unheard of, and because of this compression, I am very confident that cryptocurrencies will also see significant volatility next week. I think whether it goes up or down depends on whether the stock market can bottom out early this week."

BTC/USD vs. VIX volatility index chart. Source: Daan Crypto Trades/X

Trader Cas Abbe said that BTC's recent drop to a low of $76,000 may end up being a classic fake crash. He told X’s followers: “This looks no different than the ETF sell-off and the crash in August 2024. I’m waiting for a weekly return to $92,000 to confirm the uptrend.”

BTC/USDT 1-week chart. Source: Cas Abbe/X

V. Who is buying the dip?

El Salvador added 1 Bitcoin during this decline, and now holds 6,139.18 Bitcoins, with a total value of $488 million.

According to Onchain Lens monitoring, two major addresses have recently purchased large amounts of ETH. Among them, the “7 Sibling” address spent $41.78 million to buy 25,092 ETH at an average price of $1,665; another new wallet used $8.13 million in DAI to buy 4,983.56 ETH at an average price of $1,631.