The recent slide in Bitcoin’s price to $81.5K coincides with a broader downturn in U.S. markets, as investor sentiment reacts sharply to former President Donald Trump’s renewed tariff threats.
With March drawing to a close and “Liberation Day” looming on April 2, Bitcoin’s price action is being pulled in multiple directions, driven by macroeconomic uncertainty, policy shifts, and changes in liquidity conditions.
How Trump’s Tariffs Impact Bitcoin and Broader Market Sentiment
Trump’s tariff announcements often trigger significant movements across global markets, and Bitcoin is no exception. These tariffs, essentially taxes on imported goods, raise production costs and contribute to inflationary pressures.
As inflation rises and economic growth slows, investors tend to reallocate their capital away from traditional markets, and in some cases, into crypto.
Bitcoin has long been viewed as a hedge against economic instability, much like gold. When markets react negatively to policies such as tariffs, Bitcoin sometimes sees inflows from investors seeking a more secure store of value. However, this relationship isn’t always consistent.
Tariffs can also bolster the U.S. dollar by reducing trade deficits, and since Bitcoin tends to move inversely with the dollar, this can put downward pressure on BTC prices.
Another important consideration is liquidity. Tariff-related trade disruptions and weakened corporate earnings can lead to tighter financial conditions.
When liquidity dries up, investors may be forced to offload riskier assets, including cryptocurrencies. This need for cash can drag Bitcoin prices lower even if underlying interest in the asset remains high.
Additionally, institutional sentiment can shift when trade policies introduce financial uncertainty. If tariffs spark new regulatory discussions or lead to stricter financial oversight, institutions may scale back their exposure to crypto.
The combination of risk-off behaviour and reduced institutional demand may suppress prices further. Tariffs also influence inflation expectations, which are closely tied to Bitcoin’s narrative as “digital gold.”
If investors believe these policies will drive up prices in the long term, Bitcoin could attract more attention.
But if tariffs slow economic growth so much that deflation becomes a concern, speculative assets like Bitcoin could face significant headwinds. Assets that rely on bullish sentiment tend to underperform during low-growth or recessionary periods.
In short, Trump’s proposed 25% tariffs on imported cars and pharmaceutical products, paired with the highly publicised “Liberation Day” promise of reciprocal tariffs, have created a volatile atmosphere.
While some of these conditions could increase Bitcoin’s appeal as a hedge, others could significantly dampen demand and weigh on prices.
Bitcoin Faces a Tough Close to Q1 Amid Market Uncertainty
As the final trading day of March approaches, Bitcoin is under pressure, dipping below $82,000 amid growing uncertainty in both crypto and traditional markets. At the time of writing, BTC has fallen to $81,656, marking its seventh consecutive day of lower lows.
The sharp drop comes in tandem with declines in U.S. stock futures: the DOW dropped 206 points, while S&P 500 futures are down 0.56%.
Trump’s rhetoric surrounding “Liberation Day” on April 2, where he promises to implement reciprocal tariffs on various countries, is contributing to heightened market anxiety.
Combined with his push for new import duties, particularly a 25% tariff on imported cars and potential action against the pharmaceutical sector, these announcements are fuelling investor uncertainty and a broader sell-off across asset classes.
Bitcoin’s price performance appears to be mirroring the pullback seen in equities. The S&P 500 is down 6.3% for the month, the Nasdaq has slid 8.1%, and the DOW has lost 5.2%. If current trends continue, Bitcoin could end the first quarter with its worst performance since 2018.
Part of the weakness in BTC stems from low activity in spot markets and reduced appetite for futures positions. Traders seem to be adopting a risk-off stance as they await clarity on tariffs, inflation, and macroeconomic direction.
Compounding this is the recent U.S. Personal Consumption Expenditures (PCE) report, which revealed higher-than-expected inflation.
Meanwhile, a consumer confidence report showed that outlooks on employment, income, and business opportunities have hit their lowest level in 12 years.
This uncertain environment is making investors cautious about entering or increasing exposure to Bitcoin. Instead, many are sitting on the sidelines or reducing their risk until macroeconomic signals become clearer. This lack of conviction is adding pressure on BTC’s price in the short term.
A recent analysis from Capital Flows points out that if current liquidity conditions persist, Bitcoin may fall further, potentially testing the $72,000–$75,000 range.
Macro liquidity, which refers to the amount of capital available to flow into risk assets like stocks and crypto, plays a crucial role here.
Unlike M2, which measures the broader money supply, macro liquidity is about how easily capital can move into markets, and right now, it’s tightening.
Liquidity is being affected by interest rates, Federal Reserve policy, and broader market sentiment. Higher rates and tighter financial conditions tend to reduce the flow of funds into speculative assets.
As long as this liquidity squeeze continues, Bitcoin may struggle to find strong upward momentum, especially if investor sentiment remains cautious.
Conclusion
Trump’s tariff plans are shaping up to be a major factor for financial markets as Q1 closes, and Bitcoin isn’t immune. The interplay between inflation, liquidity, regulatory risk, and investor sentiment makes for a complicated outlook.
While Bitcoin has historically benefited during times of economic uncertainty, the current environment, marked by rising inflation, softening confidence, and tightening liquidity, poses real challenges.
If macro conditions don’t improve soon, analysts warn that Bitcoin could slip toward the $72,000–$75,000 range. Until then, traders are watching closely to see whether BTC can hold above the psychological $80,000 mark as the second quarter begins.