3 reasons why Bitcoin sells off on Trump tariff news

Bitcoin (BTC) has declined by more than 15% since Feb. 3—when US President Donald Trump threatened to impose tariffs on China, Mexico, and Canada—and was trading for as low as around $86,400 as of March 5.
BTC/USD daily price chart. Source: TradingView
Simultaneously, investors have withdrawn over $3.50 billion in assets from US-based Spot Bitcoin exchange-traded funds (ETF) since Feb. 3, according to Farside Investors data.
Let’s examine why news of Trump’s tariffs is leading to selloffs in the Bitcoin market.
Economic uncertainty sours risk-on appetite
The US imposed 25% tariffs on Canada and Mexico and 10% on China on March 4, raising concerns over supply chain disruptions and rising prices, fueling fears of a “Trumpcession.”
Risk assets typically sell off in such scenarios—in August 2019, Trump’s trade war with China triggered an 800-point Dow Jones drop, but Bitcoin surged as Chinese traders used it to bypass capital controls.
Related: Bitcoin price metric that called 2020 bull run says $69K new bottom
The Chinese government took notice of these trends and increased crackdowns on Bitcoin trading and OTC platforms in late 2019 and 2020.
This time, however, Bitcoin is behaving like a risk asset, with its 30-week correlation with the Nasdaq hitting 0.91.
BTC/USD vs. Nasdaq Composite 30-week correlation coefficient. Source: TradingView
Additionally, JPMorgan has turned “tactically bearish” toward US equities during the trade war, which may hurt Bitcoin if the correlation sustains.
Bitcoin trades 24/7
Unlike traditional markets that close on weekends, BTC trades 24/7 and reacts instantly to macroeconomic developments.
When Trump’s tariff plans were confirmed over a weekend in early February, crypto traders moved quickly, selling off Bitcoin and other assets before stock markets could react.
This led to a sharp drop on Feb. 3, pushing Bitcoin to a three-week low of $91,000, while the broader crypto market shed over $1 trillion in value from its December peak by late February.
Conversely, Trump’s announcement of a US crypto strategic reserve on March 3—also a Sunday—sparked a 9.58% surge in Bitcoin, marking its strongest daily gain since Nov. 11, 2024.
Source: Ash Crypto
That further highlights how policy shifts can drive extreme volatility in crypto markets, particularly during weekends when traditional markets are closed and fewer people are trading.
Global investors are hedging elsewhere
Typically, tariffs should strengthen the US Dollar Index (DXY) by reducing imports and boosting domestic demand.
However, this time, DXY peaked around Trump’s tariff announcement and has declined since, like Bitcoin, contradicting the usual bullish assumptions.
DXY vs. BTC/USD daily chart. Source: TradingView
While Bitcoin and the dollar are both weakening, the euro has strengthened since Feb. 3. This suggests that global investors looking to hedge against the economic impact of tariffs are turning to fiat alternatives like the euro rather than Bitcoin.
EUR/USD daily price chart. Source: TradingView
Gold, like the euro, has also surged following Trump’s Feb. 3 announcement.
XAU/USD daily price chart. Source: TradingView
The Japanese Yen (JPY), another perceived safe haven, has climbed 4.5% since Trump’s Feb. 3 announcement.
JPY/USD daily price chart. Source: TradingView
Furthermore, if the tariff announcement triggers widespread fear of a trade war or economic slowdown, investors might pull out of risk assets and also avoid the dollar if they expect US economic growth to take a hit.
Therefore, Bitcoin tends to immediately sell off on certain news, such as new tariffs, because economic uncertainty prompts a flight from risk assets, exacerbated by crypto’s round-the-clock trading.
While some argue this could benefit Bitcoin long-term if inflation spikes, the knee-jerk market response is currently one of panic and retreat.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
Bitcoin (BTC) $ 117,001.00
Ethereum (ETH) $ 2,978.83
XRP (XRP) $ 2.89
Tether (USDT) $ 0.999866
BNB (BNB) $ 680.62
Solana (SOL) $ 159.13
USDC (USDC) $ 0.999903
Dogecoin (DOGE) $ 0.191591
TRON (TRX) $ 0.297436
Lido Staked Ether (STETH) $ 2,977.09
Cardano (ADA) $ 0.724334
Hyperliquid (HYPE) $ 46.95
Wrapped Bitcoin (WBTC) $ 116,902.00
Stellar (XLM) $ 0.461856
Sui (SUI) $ 3.94
Wrapped stETH (WSTETH) $ 3,597.57
Chainlink (LINK) $ 15.32
Hedera (HBAR) $ 0.231241
Bitcoin Cash (BCH) $ 487.85
Avalanche (AVAX) $ 21.00
LEO Token (LEO) $ 9.00
Wrapped eETH (WEETH) $ 3,190.41
Shiba Inu (SHIB) $ 0.000013
Toncoin (TON) $ 2.98
WETH (WETH) $ 2,976.86
Litecoin (LTC) $ 92.36
USDS (USDS) $ 0.999722
Binance Bridged USDT (BNB Smart Chain) (BSC-USD) $ 0.999763
WhiteBIT Coin (WBT) $ 45.52
Monero (XMR) $ 334.14
Polkadot (DOT) $ 3.87
Coinbase Wrapped BTC (CBBTC) $ 116,959.00
Uniswap (UNI) $ 9.03
Ethena USDe (USDE) $ 0.999950
Bitget Token (BGB) $ 4.49
Pepe (PEPE) $ 0.000012
Aave (AAVE) $ 310.16
Bittensor (TAO) $ 422.80
Dai (DAI) $ 0.999930
Pi Network (PI) $ 0.449665
Cronos (CRO) $ 0.104851
Aptos (APT) $ 4.82
Ethena Staked USDe (SUSDE) $ 1.18
NEAR Protocol (NEAR) $ 2.50
Ondo (ONDO) $ 0.902553
OKB (OKB) $ 47.19
BlackRock USD Institutional Digital Liquidity Fund (BUIDL) $ 1.00
Internet Computer (ICP) $ 5.27
Jito Staked SOL (JITOSOL) $ 193.41
Ethereum Classic (ETC) $ 17.98
Algorand (ALGO) $ 0.285827
Mantle (MNT) $ 0.695584
Kaspa (KAS) $ 0.084263
USD1 (USD1) $ 0.999558
Bonk (BONK) $ 0.000028
Ethena (ENA) $ 0.335230
Pudgy Penguins (PENGU) $ 0.032914
VeChain (VET) $ 0.024004
Cosmos Hub (ATOM) $ 4.49
POL (ex-MATIC) (POL) $ 0.222306
Arbitrum (ARB) $ 0.400185
Sei (SEI) $ 0.342080
sUSDS (SUSDS) $ 1.06
Fasttoken (FTN) $ 4.50
Render (RENDER) $ 3.70
Pump.fun (PUMP) $ 0.005389
Gate (GT) $ 15.59
Official Trump (TRUMP) $ 9.12
Binance-Peg WETH (WETH) $ 2,978.10
Artificial Superintelligence Alliance (FET) $ 0.689077
Worldcoin (WLD) $ 1.00
Filecoin (FIL) $ 2.50
Lombard Staked BTC (LBTC) $ 116,456.00
Sky (SKY) $ 0.076244
Binance Staked SOL (BNSOL) $ 169.29
Jupiter Perpetuals Liquidity Provider Token (JLP) $ 4.70
KuCoin (KCS) $ 11.49
USDtb (USDTB) $ 0.999769
Jupiter (JUP) $ 0.482338
First Digital USD (FDUSD) $ 0.997200
Kelp DAO Restaked ETH (RSETH) $ 3,121.28
Rocket Pool ETH (RETH) $ 3,393.17
SPX6900 (SPX) $ 1.47
USDT0 (USDT0) $ 1.00
NEXO (NEXO) $ 1.30
Celestia (TIA) $ 1.82
Story (IP) $ 4.22
Fartcoin (FARTCOIN) $ 1.23
XDC Network (XDC) $ 0.073521
Injective (INJ) $ 12.18
Flare (FLR) $ 0.017030
Stacks (STX) $ 0.769587
Optimism (OP) $ 0.647405
Mantle Staked Ether (METH) $ 3,185.15
StakeWise Staked ETH (OSETH) $ 3,127.89
Solv Protocol BTC (SOLVBTC) $ 116,845.00
Polygon Bridged USDT (Polygon) (USDT) $ 0.999910
Sonic (S) $ 0.336328
Virtuals Protocol (VIRTUAL) $ 1.60
Binance Bridged USDC (BNB Smart Chain) (USDC) $ 0.999832