Bitcoin bull market in peril as US recession and tariff worries loom

In the first three months of his presidency, Donald Trump has ignited trade tensions by announcing tariffs on Canada, Mexico, and China and the result has been unexpected turmoil in US and global markets.

The fallout from the tariffs has been relatively swift, and the impact has been felt across the crypto market. As of March 8, the US president had backed away from some plans to impose tariffs on certain Mexican and Canadian goods—another twist in the rollercoaster of US trade policy that continues to shake markets.

Singapore crypto trading firm QCP Capital said in a note. “This week’s crypto markets have been nothing short of a roller coaster. With macro conditions in flux, crypto remains tightly linked to equities, with price action reflecting broader economic shifts.”

The wild swings underscore the volatility ahead for cryptocurrencies—often seen as high-risk assets—as the Trump administration tests the limits of economic and foreign policy and serves as a cautionary tale as uncertainty pervades markets. 

In a post on X, former US Treasury Secretary Lawrence Summers said that […] tariff policy has already taken $2 trillion off the value of the US stock market,” and Summers suggested that these measures were “ill-conceived” and that they would undermine US competitiveness.

“No wonder Wall Street’s fear gauge is up by one-third.”

While tariffs and Trump’s market-moving policy announcements may create a sense of impending doom, their impact on the future of the crypto sector remains in question. If a trade war weakens the US dollar through inflation, Bitcoin could actually benefit, says Eugene Epstein, head of trading and structured products at Moneycorp. Investors fleeing depreciating fiat currencies may turn to crypto, and if tariff-hit nations devalue their currencies in response, Bitcoin could serve as a vehicle for capital flight.

Unlike traditional markets, Bitcoin trades 24/7 and reacts instantly to macroeconomic shifts, making it highly vulnerable to risk-off sentiment. “Sentiment-wise, the primary drivers of crypto will continue to be the status of a federal crypto reserve as well as overall risk sentiment. If US equities continue falling it is hard to envision a strong crypto market, at least in the near term,” Epstein said.

Many in the crypto community expected Trump’s return to the White House to send Bitcoin soaring, and initially, it did—rising from $69,374 on Election Day to a record $108,786 by Inauguration Day. But since then, BTC has tumbled, dropping below $80,000 by late February and again in March. The price weakness comes despite the administration’s pro-crypto stance, including plans for a strategic crypto reserve and market-structure reforms.

Cumulative flows into Bitcoin Spot ETFs reached record highs following Trump’s victory, with investors pouring over $10 billion into these instruments in the aftermath of the election, according to data by Farside Investors. However, growing concerns over a potential tariff war seem to have taken a toll on market sentiment and, by extension, on cryptocurrencies.

Since early February, Bitcoin ETFs have seen significant outflows as uncertainty looms over the broader economic landscape. At the same time, safe haven assets like gold, have actually responded positively amid the tariff war.