The escalating trade war has hit both Bitcoin and stocks, as traders reassess risk assets and turn to gold.
The crypto market cap has lost $1 trillion over the fears of a US trade war, as traders sold Bitcoin (BTC) and turned to gold (gold). According to the latest Binance report, escalating US tariffs are spiking fears in both crypto and the stock market.
Notably, the Donald Trump administration has announced a 10% blanket tariff, effective April 5, on all countries. Several jurisdictions will see even higher rates, including a 34% tariff on China, a 20% tariff on the EU, and a 24% tariff on Japan.
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Certain industries will also face specific levies, particularly the auto sector, which is subject to an additional 25% duty. As a result, average US tariffs have risen to 18.8%, the highest level since the Smoot-Hawley Tariff Act of 1930.
Average US tariffs on all imports | Source: Binance
Since February 2025, the crypto market cap has dropped 25.9%, or $1 trillion. Specifically, Bitcoin is down 19.1% and Ethereum 40%. Memecoins and AI tokens have fared worse, falling more than 50% overall.
Bitcoin acted more like a risk asset, less as a hedge
Bitcoin’s negative performance has increased its correlation with the S&P 500. This figure rose from –0.32 to 0.47, suggesting that during market downturns, Bitcoin behaves more like a risk asset than a hedge.
Crypto, gold, and S&P 500 price performance since February 2025 | Source: Binance
In contrast, gold has reaffirmed its role as a safe haven against market risk and inflation. The asset is up 10.3% since February, while its correlation with Bitcoin has dropped to –0.22. This divergence occurred despite inflation expectations rising to an annual rate of 3–5%.
The growing negative correlation undermines Bitcoin’s reputation as “digital gold” and a hedge against inflation. As a result, institutions may be less inclined to add Bitcoin to their portfolios as a defensive asset.
Read more: Bitcoin bleeds, stocks sink, and tariffs spike — is this the start of a global sell-everything moment?
