Bitcoin has dropped up to 5 percent to below $65,000 on Monday following the announcement by U.S. President Donald Trump to increase global tariffs to 15 percent.
The decline followed as the Asian equities went up in early trade, highlighting the disconnect between crypto and the regional stock markets in the light of a fresh wave of tariff speculation.
Bitcoin has been selling off sharply since it reached over $125,000 in October last year, the slump continuing well into the new year. The biggest cryptocurrency in the world is now down 26 percent this year and has fallen more than 47 percent since it peaked in October.
Jeff Mei, COO at global blockchain technology company BTSE, said, “We believe that the sudden uptick in tariff rates is causing investors to sell crypto assets in anticipation of a more serious market decline.”
He reported that the investors also fear that the concentration of the U.S. military troops in Iran increases the chances of armed conflict that may spread to other states in the region and affect the global trading activities.
The U.S. military buildup has been immense in the Middle East, and Trump indicated last Thursday that he would decide within the next 10 days on whether to attack Iran.
Markus Thielen, Head of Research at Market Intelligence Platform 10x Research, said that the most recent slump in bitcoin was not caused by a single headline, but rather by poor liquidity in markets and low confidence in the market.
Thielen attributed the decline to a typical bear-market period with low volumes and uncertainty surrounding U.S. midterm elections, predicting further declines to around $50,000 before a more lasting bottom develops.
Safe-haven demand saw spot gold trading over 1 percent higher on Monday, indicating a robust divergence from bitcoin, which has often been referred to as “digital gold,” including by U.S. Federal Reserve Chair Jerome Powell.
The cryptocurrency lost part of its losses and fell 3 percent to $65,167 at 12.18 a.m. ET. Ether is the second most popular cryptocurrency, and it was trading down 3.9 percent at 1,867.3.
Earlier this month, Bitwise Chief Investment Officer Matt Hougan stated that bitcoin’s slide was primarily due to the crypto market’s “four-year cycle,” adding that the recent fall is similar to those found during previous market declines. Bitwise has over $15 billion in assets under management and is deep into crypto ETFs.
Hougan noted that there was no single catalyst were not solely driven by a single factor, pointing instead to investors rotating into gold and artificial intelligence stocks, lingering concerns over Fed nominee Kevin Warsh, and broader “quantum risk.” Bitcoin reached a more than 1-year low of $63,119.8 on February 5.
