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The cryptocurrency market, which had rallied earlier in the week on hopes of easing trade tensions, experienced a significant downturn over the past 24 hours as renewed fears surrounding U.S. President Donald Trump's tariff policies gripped global markets. Bitcoin, Ethereum, and other major cryptocurrencies saw declines that mirrored the risk-off sentiment that also swept through traditional equities.
Bitcoin (BTC), which had surged from around $75,000 to above $83,000 following optimistic market interpretations on Wednesday, saw those gains partially erased. The leading cryptocurrency currently trades around $80,500, marking a 2.42% decrease in the last 24 hours. Ethereum (ETH) faced even steeper losses, falling by 6.37% to sit at $1,538. Solana (SOL) also retreated, down by 1.82% to trade at $115. The global cryptocurrency market capitalization has decreased by 1.88% over the last day, settling at $2.56 trillion.
The initial positive reaction in the crypto market to Wednesday's developments proved unsustainable as the implications of escalating U.S. tariffs on China, now at least 145%, and the threat of further tariffs and sanctions on Mexico over water rights, began to weigh heavily on investor sentiment. The positive news surrounding the SEC's approval of Ethereum options ETFs, while potentially bullish in the long term, was unable to counter the immediate bearish pressure stemming from macroeconomic concerns.
This risk-averse sentiment extended into traditional financial markets, where U.S. equity indices experienced a significant sell-off despite the release of cooler-than-expected inflation data. The Nasdaq 100 led the decline, plummeting by 6.3%, while the S&P 500 fell by 5.5%.
The Bureau of Labor Statistics reported yesterday that the Consumer Price Index (CPI) for March indicated easing inflationary pressures, with both headline (+2.4% YOY, est. +2.5%) and core CPI figures (+2.8% YOY, est. +3.0%) falling below forecasts on a month-over-month and year-over-year basis. Initial and continuing jobless claims data also presented a mixed picture, with initial claims meeting expectations and continuing claims showing a decrease.
However, these seemingly positive economic indicators were overshadowed by the escalating trade tensions initiated by the Trump administration. The significant increase in tariffs on Chinese goods and the threat of further trade action against Mexico have stoked fears of slower global economic growth and reduced corporate earnings, particularly within the technology sector, which is highly sensitive to international trade. This explains the outsized decline in the Nasdaq 100.
The synchronized downturn across both cryptocurrency and traditional equity markets highlights the increasing interconnectedness of these asset classes and their shared sensitivity to macroeconomic and geopolitical risks. The coming days will be crucial in determining whether this risk-off sentiment persists or if markets find a footing amidst the ongoing uncertainty.
