Cryptocurrency prices plunged in tandem with a sharp selloff across global equity markets. Mounting U.S.-China trade tensions and a surging U.S. dollar fueled risk aversion, driving Bitcoin and other digital assets lower. Bitcoin sank nearly 4%, dragging most major altcoins into the red as U.S. stocks endured their worst slide since April.
Wall Street Selloff Sparks Fear Across Markets
Investors dumped risk assets after former President Trump announced plans for a 100% tariff on Chinese imports and hinted at export restrictions on key software products starting in November. The S&P 500 fell about 2.7%, the Nasdaq dropped roughly 3.5%, and the Dow Jones lost close to 1,900 points over two sessions.
As fears of a renewed trade war intensified, markets shifted into full “risk-off” mode. Traders piled into safe-haven assets like U.S. Treasuries and gold, pushing yields lower and adding pressure to high-growth tech and crypto-related stocks.
Cryptocurrencies Take the Hit
The crypto market reacted swiftly to the macro storm. Bitcoin slid to around $116,900 intraday, a roughly 4% drop. Ethereum fell about 0.7%, while Solana declined roughly 1.2%. Analysts attributed the downturn partly to a strengthening U.S. dollar, which makes dollar-based assets like Bitcoin less attractive. The recent run-up to new highs near $125,000 also set the stage for profit-taking and a potential momentum unwind.
Crypto-related equities mirrored the weakness. Shares of exchanges, mining companies, and blockchain infrastructure providers slumped alongside the broader tech sector, amplifying the downturn.
Key Factors Behind the Slump
Several forces drove the selloff across both crypto and equities:
- Trade policy shock: Trump’s tariff announcement caught markets by surprise, reigniting fears of an extended trade conflict and global economic slowdown.
- Dollar strength: A rising dollar increases the opportunity cost of holding cryptocurrencies, leading some investors to shift into cash or safer assets.
- Technical pullback: Bitcoin’s surge past $125,000 left it vulnerable to a natural correction.
- Cross-market contagion: Correlations between equities and crypto mean weakness in one often spills into the other, especially in volatile environments.
Some analysts see the correction as a healthy reset for an overheated market, though the growing macro uncertainty leaves less cushion for speculative positions.
Market participants are closely monitoring the U.S. government’s next moves—whether the tariff stance softens, trade talks resume, or the Federal Reserve steps in to stabilize conditions. Any sign of escalation could extend the selloff across asset classes.
For now, volatility remains the name of the game. If equity markets stay under pressure, cryptocurrencies could face more downside. However, extreme oversold conditions may soon trigger short-covering rallies. Much will depend on whether policymakers restore a sense of macro stability.
