Trade War Tariffs Fuel Extreme Fear: Bitcoin Slumps Amid Massive Liquidations

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The crypto market’s shift into “extreme fear” (Fear & Greed Index: 25) reflects escalating concerns over potential U.S. trade wars.

In the last 24 hours, Bitcoin fell over 12% to $86,000 following Trump’s proposed tariffs on Canada, Mexico, and China, with altcoins declining further as investors retreated from risk assets.

Sustained trade tensions could push Bitcoin toward critical support levels at $81,000 or below, particularly if inflation fears or economic slowdowns intensify.

However, two countervailing factors may emerge:

  1. Inflation Hedge Narrative: Prolonged tariffs could amplify Bitcoin’s appeal if inflationary pressures rise.
  2. Policy Catalysts: Trump’s pro-crypto agenda (e.g., Bitcoin ETF approvals, regulatory clarity) might stabilize sentiment once short-term risks ease.

The $3–5 billion in leveraged liquidations suggests market corrections may eliminate overleveraged positions, potentially creating a rebound opportunity if trade tensions de-escalate.

For now, crypto remains tightly correlated with macroeconomic uncertainty, balancing bearish trade risks against structural bullish drivers like institutional adoption.

Ryan Lee, Chief Analyst at Bitget Research

Disclosure: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.

Kriptoworld.com accepts no liability for any errors in the articles or for any financial loss resulting from incorrect information.

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