Crypto: Crypto Market Crash Deepens As Investors Digest Trump Tariff Threat

Crypto markets sell off as US stocks and global markets react to President Trump’s new tariff threats. Will the tensions put a stop to Bitcoin's start-of-year recovery?

Rising US and Japan bond yields signal macroeconomic stress, dragging the total crypto market capitalization 32% below its Oct 2025 peak.

Bitcoin (BTC) and Ether (ETH) retested their lowest levels in more than two weeks after crypto and stock markets digested US President Donald Trump’s fresh round of tariff threats. The potential tariffs are an attempt by the administration to convince Denmark to reconsider its control of Greenland. European nations have shown little willingness to negotiate, prompting crypto and equities investors to adopt a more risk-averse stance.

The S&P 500 index fell 1.9%, while gold prices surged to a new all-time high on Tuesday. The total cryptocurrency market capitalization dropped to $2.71 trillion on Tuesday, down from nearly $3 trillion the previous Wednesday.

Yields on the 5-year US Treasury climbed to their highest level in almost six months, a move often linked to fears of recession or rising inflation. Investors demanded higher returns to hold US government debt, signaling weakening confidence.

Billionaire investor and hedge fund manager Ray Dalio told CNBC that a “new phase of global financial conflict” may be emerging as foreign governments reassess their exposure to US assets amid growing uncertainty and economic strain. Dalio noted that history provides several examples where economic disputes expanded beyond trade into capital flows.

In the past, Dalio has raised concerns about declining confidence in the US dollar. While this backdrop could appear favorable to those who view cryptocurrencies as an alternative monetary system, silver has been the standout performer so far, rising 64% since December. The precious metal’s market capitalization has climbed to $5.3 trillion.

European Commission President Ursula von der Leyen warned on Tuesday that any response to US threats would be “unflinching, united, and proportional,” increasing fears of negative spillovers into equity markets.

Bitcoin ranked as the eighth-largest global tradable asset with a market capitalization of $1.8 trillion, but competitors such as TSMC (TSMC US) and Saudi Aramco (2222 SR) are rapidly closing the gap. Ether’s position appears more fragile, with a $360 billion market capitalization, placing it 42nd overall after being overtaken by Home Depot (HD US) and Netflix (NFLX).

Source: CoinTelegraph