Crypto markets recoil in the wake of Liberation Day tariffs

Price chart for Bitcoin following Trumps tariff announcement, April 4, 2025 | Source: crypto.news

On the other hand, Ethereum (ETH) suffered a worse drop of 5.2% after Trumps announcement. At press time, ETH has fallen by 1.24% and is currently trading hands by $1,801.

Solanas price also declined by nearly 3% after the tariffs announcement. SOL (SOL) has since recovered slightly, only falling by 1.9% in the past 24 hours. The token is currently valued at $116.24. Just a day prior, it was still trading within the $119 to $118 price range, plunging since.

Despite the market volatility among crypto assets, analysts believe that tariffs could bring about another crypto rally.

How can tariffs make or break the crypto market？

Although things are looking bleak on the crypto market after Trumps tariff announcement, experts believe that once the initial shock wears off, cryptocurrencies could see a long-term rally in the wake of the economic uncertainty in traditional markets due to the tariffs.

If the tariffs end up pushing the economy toward a recession, the Federal Reserve could potentially lower interest rates or even quantitative easing that would inject liquidity into the financial system. A boost in global liquidity could bring about a rise in investor appetite for risk assets, such as Bitcoin and other cryptocurrencies.

So far, investors have flocked to the more traditional safe haven asset, such as gold. Following Trump‘s Liberation Day tariffs, gold soared near its all-time high. Spot gold hit record high of $3,148.88 per ounce on Tuesday. However, it later retreated to $3,110 after there were reports that precious metals would be excluded from Trump’s tariffs.

With traditional markets like stocks and bonds are in turbulence due to heightened trade tensions, investors may gravitate towards alternative assets as a hedge against inflation and economic uncertainty.

BitMEX co-founder and renowned crypto analyst, Arthur Hayes, explained how tariffs could prove beneficial to the crypto market in his recent post. He expected the global imbalance will be corrected and that fiat currencies would weaken. The weakening of traditional currencies like the dollar and the yuan could prove to be a boost for Bitcoin.

Some of yall are running scurred, but I LOVE TARIFFS, some chart porn to understand why.

Global imbalances will be corrected, and the pain papered over with printed money, which is good for $BTC.

— Arthur Hayes (@CryptoHayes) April 4, 2025

“The $ [dollar] is weakening alongside foreigners selling U.S. tech stocks and bringing money home. This is good for BTC and gold over medium term,” said Hayes in his post.

In contrast, Bitfinex analysts warned traders that the tariffs reveal could lead to a deeper correction in the crypto market. Before Trumps tariff announcement, Bitfinex said to crypto.news that if the tariffs stayed within the 12-20% range, markets could react positively and crypto may even see a brief rally.

However, because the tariffs deployed by Trump have exceeded this range, Bitfinex analysts predict there will be renewed de-risking.

“We could see a continuation of the downtrend thats played out since February,” said analysts.