Bitcoin Drops As Tariffs Shake Global Markets

The value of bitcoin and cryptocurrencies dropped in the last 24 hours. With resumed trade tariffs looming, how badly will the decision impact crypto over the next few months?

In April, talk of tariffs by the new US administration sent the global markets into retreat. The impact it had on bitcoin was to sink it to levels of around $75,000. A delay in these gave hope to economies and markets, and with fears about inflation and recession quelled, bitcoin began a rise, soon surpassing the $122,000 mark for a record high. With tariffs back on the table, could bitcoin be set for further falls?

The Impact on Bitcoin’s Price

Delayed tariffs from April have come into play, and bitcoin has been hit hard. At the time of writing, its value has dropped to $114,741, diving just under 4% over the last five days and 2.3% in the previous 24 hours. Part of this change was also driven by increased profit-taking. This result has not been as bad as many may have predicted. According to Binance.com, even at the start of the week, crypto assets had cooled off after a strong rally. Bitcoin had consolidated in the $116 to $119 range, with Ether already declining against it. It also noted that volatility had decreased to 10% at its lowest level.

Several major nations, including the United Kingdom, Japan, and South Korea, now have trade agreements in place. There is also still a short window at the start of August when agreements could be made. This means that for now, some of the worst price changes may be staved off.

Furthermore, a monthly report published by Binance highlighted how geopolitical tensions in the Middle East had already contributed to widespread risk-off sentiment. It also notes that a tempering of the US-China trade war has resulted in a peak of short-term trade uncertainty passing. However, worries are that this may now come back into being unless further talks can be held.

Some are viewing this as a simple buy in the dip zone. There has been a dearth of bitcoin on retail markets for some time, and demand remains. Institutional hunger is also continuing to lap up the supply, so it does not seem to be a major issue for bitcoin so far. It is also worth noting that it closed last month above $115,000, its highest monthly close ever recorded.

Altcoins Also Suffer

Altcoins have also been hit hard. Losses of 5% plagued Ether, as it dropped to $3,600. It has since recovered above the $3,700 level. Mainly, this has been buoyed by a continuation of inflows into spot ETH ETF products.

Almost 6% was shaved off XRP and SOL. There was between 7% to 10% wiped off Dogecoin, Cardano, and Sui. Memecoins were also hit hard, with Pudgy Penguins losing 11% of their value. This has put a dampener on what many were predicting as a vibrant altcoin season to be upon us.

There are also still trade talks with major partners hanging in the balance. If these are not agreed, then prices could drop even further. For some, this may be the perfect time to buy. However, investors should be aware of any potential outflows from ETF products and possible sell-offs from bitcoin treasuries.

Whales Still Selling Bitcoin

Behind this has been a continuation of sell-offs by whales. The third major sell-off has taken place since mid-2024, which has also been exacerbated by sell-offs from miners. They accounted for 15,000 BTC after July's high point. Whales are large holders of cryptocurrency, and large sell-offs by them can seriously shift the market.

Another theory is that these whales are institutions. They may be looking to cash in on the high price while predicting a difficult third quarter due to unfolding economic conditions. It is not uncommon for a cooling market to produce fewer gains in the third quarter, according to Bitcoin's historical data.

Corporate America also continues to hold confidence in Bitcoin. Twenty One Capital, the first ever native bitcoin company, has announced that it wants to add a further 5,800 bitcoins, bringing its total holdings to 43,500. In doing so, it will become the third biggest holder of Bitcoin in the world.

Added to this has been the Strategy announcing a second-quarter profit. The world's largest corporate holder of bitcoin has ridden the wave of sentiment as the price of bitcoin swung up at the start of the year. It now holds 597,325 after starting an accumulation in 2020.

To see where bitcoin may go in the short term, it may help to look at the result of the last tariff talks in April. After a dip, Bitcoin then benefited from record highs and went on a huge bull run. While economic conditions are now different, there is no reason this could not be repeated.

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