Bitcoin prices – as also the wider cryptocurrency and capital market – are buckling up for a potential bloodbath on Wednesday and the coming days with US President Donald Trump’s proposed retaliatory trade tariff plans pushing the US economic uncertainty index to record levels, even surpassing the 2008 financial crisis peak and the April 2020 pandemic high, market experts said.
The risk of widespread and aggressive policies could heighten recession fears, leading to large-scale sell-off of risk assets, potentially plunging market stars bitcoin and AI-driven tech stocks to unprecedented levels, they said.
The five-day moving average of the US economic uncertainty index hit approximately 634 in March, surpassing the 2008 financial crisis peak by 270 points and the April 2020 pandemic high.
Markets uncertain ahead of Trump Tariff announcement
The timing proves particularly delicate for the crypto market as digital assets started maintaining an elevated correlation with traditional markets.
Agne Linge, Head of Growth at WeFi deobank, said: “Bitcoin’s 0.67 correlation coefficient with the Nasdaq suggests equities weakness could continue dragging crypto prices lower”.
Shivam Thakral, CEO of BuyUcoin, India’s second-longest-running digital asset exchange, said the crypto market braces for Trump’s tariff announcement today with bated breath.
He said: “Trump’s tariff announcement could significantly impact the crypto market momentum”.
Market experts said a series of market sensitive reports, due this week that could reveal how much stress the economy is feeling from Trump’s tariffs and steep federal job cuts, will also have a major impact on the market’s future course.
The global crypto market cap was at $2.72tn in the morning hours on Wednesday, 1.34 per cent up from the previous day, ahead of the announcements on tariffs.
The flagship cryptocurrency bitcoin was trading at $84,538, almost two percent high from the previous day’s level.
Experts said the market remains in suspended animation amid reports of intense discussions ongoing ahead of unveiling of the next batch of tariffs on Wednesday, which Trump billed as “Liberation Day”.
With consumer confidence at a 12-year low, stock market volatility has intensified, marked by weekly declines of 4 to 5 per cent, they said.
The latest market analysis by QCP, a digital asset trading firm that offers research and analysis, revealed that Bitcoin (BTC), Ethereum (ETH), and the S&P 500 Index all posted their worst quarterly performance in three years.
Thakral said investors are seen moving towards traditional assets to safeguard their wealth from the impact of the tariff trade war even as Bitcoin (BTC) is trading below the $85,000 mark.
“We have witnessed a high level of uncertainty in the global financial markets due to the trade tariff war, as the increased correlation between the traditional market and Bitcoin is clearly visible,” he said.
WeFi’s Linge also said Bitcoin’s increasing correlation with traditional markets has amplified its exposure to broader macroeconomic trends, making it more sensitive to the risk-off sentiment that has affected equity markets.
Crypto markets are closely tracking investor sentiment ahead of Trump’s April 2 tariff announcement, with growing concerns over the potential economic impact of escalating trade tensions, she said.
“The recent downturn in the S&P 500, hitting a new low, serves as a strong signal that global markets are facing heightened uncertainty, which in turn is putting pressure on risk assets, including cryptocurrencies.”
The WeFi Growth Chief said along with the surge in the US economic uncertainty index, the trend of inflationary pressures remaining persistent is also adding to the growing concern about the stability of the global economy.
“The core personal consumption expenditures (PCE) price index, a key inflation measure favoured by the Federal Reserve, showed a 0.4 percent increase in February, pushing the 12-month inflation rate to 2.8 percent, both of which are above expectations,” she said.
Ryan Lee, Chief Analyst at Bitget Research, said as markets enter the second quarter, Bitcoin and Ethereum face a confluence of macroeconomic and technical factors that could define their near-term projections.
They said historically, protectionist measures, including raised trade tariffs, trigger risk aversion across asset classes, and crypto has not been immune.
“The timing proves particularly delicate as digital assets maintain elevated correlation with traditional markets.
“Bitcoin’s 0.67 correlation coefficient with the Nasdaq suggests equities weakness could continue dragging crypto prices lower,” Lee said.
The Bitget Research chief analyst, however, pointed out that a stark divide appears in ETF (exchange traded fund) flows, with Bitcoin products attracting steady inflows, while Ethereum equivalents bleed capital.
“This institutional preference shift shows Bitcoin’s hardening reputation as a macro hedge, even as Ethereum’s utility-driven valuation struggles for footing,” Lee said.
Meanwhile, market participants are also eagerly awaiting a slew of big reports due this week, which could reveal how much stress the economy is feeling from Trump’s tariffs and steep federal job cuts.
On Tuesday, the Institute for Supply Management’s manufacturing activity index for March came out, while the US Labour Department will report February job openings and turnover.
On Wednesday, ADP will release private-sector payroll data for March, and on Thursday ISM will publish its monthly services-activity index, and the Labor Department will report weekly jobless claims.
On Friday, the Labour Department will issue its highly anticipated March jobs report, while Federal Reserve Chairman Jerome Powell is also scheduled to speak.
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