After a period of optimism and steady gains in the crypto markets, Bitcoin’s momentum took a sharp hit, plunging below $109,000 following renewed trade war rhetoric from former U.S. President Donald Trump. The market reaction underscores how macro-political risks continue to affect digital assets, especially Bitcoin.
Trump’s Trade War Comments Spark Panic Selling
In a speech delivered on May 22, 2025, Trump announced intentions to reinstate aggressive tariffs on Chinese imports, signaling a potential return to the U.S.–China trade war that rattled global markets in 2018–2019.
“We will protect American jobs and manufacturing by reintroducing necessary trade barriers,” Trump declared during a campaign event in Florida.
Immediately after the announcement, Bitcoin fell from $113,000 to below $109,000 within hours, reflecting fears of broader economic instability and risk-off sentiment.
Bitcoin’s Sensitivity to Geopolitical Tension
While Bitcoin is often dubbed “digital gold,” it continues to show volatility in response to political and economic news. Analysts say this is due to Bitcoin’s increasing integration with traditional financial markets and institutional portfolios.
“As institutions adopt Bitcoin, it becomes more correlated with macroeconomic risk factors,” noted crypto analyst Mike Harrington.
Investors appear to be shifting capital into more stable assets such as U.S. Treasury bonds and fiat currencies in response to the trade tension.
Market-Wide Impact: Altcoins Also Suffer
The market downturn didn’t stop at Bitcoin. Ethereum dropped 4.2% to $3,820, while Solana (SOL) and Avalanche (AVAX) posted losses of over 6% each. The crypto fear and greed index also dropped to 48, reflecting rising uncertainty.
“This isn’t just a Bitcoin dip—this is a shift in investor sentiment,” said on-chain data provider Glassnode.
Trading volume surged on major exchanges as traders rushed to rebalance portfolios and hedge against further downside.
Looking Ahead: Caution as Volatility Returns
With the U.S. elections drawing near and global economic tensions rising, market analysts expect continued volatility in both crypto and equities.
Bitcoin’s current support level is seen at around $106,500, and a break below this could trigger a deeper correction. However, long-term holders remain bullish on BTC’s role as a hedge against fiat devaluation.
“Trade wars are temporary. Bitcoin’s long-term fundamentals remain strong,” one investor shared.