The cryptocurrency market took a sharp hit following Donald Trump’s April 2 declaration of a national emergency and the rollout of sweeping tariffs on all trading partners. Bitcoin fell to $82,876 while Ethereum tumbled over 6%, triggering a 5,3% decline in total crypto market capitalization. The initial market optimism faded fast as the full scope of the tariffs emerged, leading to panic selling across the board.

Trump’s Global Tariffs Shake Investor Confidence

The new trade policy includes a 10% blanket tariff on all countries, with even harsher rates for major partners: 34% on China, 20% on the EU, and 24% on Japan. As Trump unveiled the policy live from the White House, financial markets reacted in real time, with the S&P 500 shedding $2 trillion in value—one of the sharpest one-day downturns in years.

Bitcoin initially rallied to $88,500 before rapidly reversing course, highlighting the fragile investor mood. Ethereum dropped from $1,934 to $1,797. The Crypto Fear & Greed Index fell to 25, signaling “extreme fear.”

Panic Selling Followed by Mild Stabilization

BTC and ETH have since seen mild rebounds—Bitcoin recovering to $83,594 and Ethereum to $1,820. Analysts attributed the initial spike to “uncertainty relief,” which quickly gave way to intense selling once the full details of the tariffs were revealed.

Rachael Lucas of BTC Markets noted that trading volume surged 46% as large holders offloaded positions, while retail investors hesitated.

Will Retaliation Worsen the Selloff?

The market remains highly sensitive to geopolitical developments. Crypto investment strategist David Hernandez of 21Shares said the tariff clarity may offer a silver lining if retaliation from China and the EU is limited. “Markets hate ambiguity,” he said, noting that compressed crypto prices could attract institutional buyers if the global response stays measured.

For now, investors are bracing for possible counter-tariffs from U.S. trading partners. Any escalation could deepen volatility and trigger renewed selloffs. As global tensions rise, crypto remains on edge—balancing between further turmoil and the potential for renewed accumulation at lower valuations.

A few days ago, it was reported that Bitcoin funds trade at discount as demand drops.