Trade War Turmoil: Bitcoin and Stocks Plummet as Investors Flee to Gold

Holy smokes, the trade war is wreaking havoc on both Bitcoin and the stock market! Traders are ditching risk assets left and right, scrambling for the safety of gold.

The crypto market cap has tanked a mind-blowing $1 trillion thanks to fears of a US trade war. Investors are dumping Bitcoin like it's hot and rushing into gold. A recent Binance report spilled the beans that those escalating US tariffs are sending shockwaves through both crypto and stocks.

Get this: the Donald Trump administration just dropped a bombshell, announcing a 10% blanket tariff on all countries, effective April 5. But wait, there's more! Some places are getting hit even harder, with a whopping 34% tariff on China, a 20% tariff on the EU, and a 24% tariff on Japan. Ouch!

And if you thought that was bad, buckle up! Certain industries, especially the auto sector, are getting slammed with an extra 25% duty. As a result, average US tariffs have skyrocketed to 18.8%, the highest level since the infamous Smoot-Hawley Tariff Act of 1930. Talk about a blast from the past!

Since February 2025, the crypto market cap has taken a nosedive of 25.9%, or a cool $1 trillion. Bitcoin's down 19.1%, while Ethereum's plummeted 40%. But hold onto your hats, because memecoins and AI tokens have taken an even bigger hit, falling more than 50% overall. It's a bloodbath out there!

Bitcoin acted more like a risk asset, less as a hedge

Get this: Bitcoin's been acting more like a risk asset than a hedge lately. Its correlation with the S&P 500 has gone from –0.32 to 0.47, meaning when the market takes a dive, Bitcoin's right there with it.

Meanwhile, gold's been shining bright as a safe haven against market risk and inflation. It's up 10.3% since February, while its correlation with Bitcoin has dropped to –0.22. And this is happening even as inflation expectations are climbing to an annual rate of 3–5%.

This growing negative correlation is putting a serious dent in Bitcoin's rep as "digital gold" and a hedge against inflation. As a result, institutions might be thinking twice about adding Bitcoin to their portfolios as a defensive asset. It's a wild ride in the world of crypto, and the trade war is only making things more unpredictable!