Investors responded to a surge in trade protectionism, notably the unprecedented announcement of new tariffs by the US on Canada and the EU, with classic ‘risk-off’ behaviour
The crypto market is experiencing sharp volatility amid global economic uncertainty and trade tensions. However, industry players say this is a normal part of the financial cycle, not a setback. According to them, with growing institutional interest and strong fundamentals, the digital asset space is well-positioned for long-term growth.
According to Binance, the crypto market is navigating a turbulent macroeconomic landscape as heightened global trade tensions trigger a pronounced ‘risk-off’ shift across asset classes. Binance Research analysis showed the total crypto market capitalisation plummeted by approximately 25.9 per cent, an indicator of the asset class’ sensitivity to geopolitical and policy-driven disruptions.
Safe havens
Investors responded to a surge in trade protectionism, notably the unprecedented announcement of new tariffs by the US on Canada and the EU, with classic ‘risk-off’ behaviour, rotating out of risk assets like crypto and equities and into traditional safe havens. Gold also hit consecutive all-time highs, while bond markets have witnessed renewed interest.
Meanwhile, crypto assets have mirrored global equities, experiencing significant sell-offs, weakened demand, and a slide into correction territory.
According to its research, Bitcoin (BTC), the crypto market’s flagship asset, experienced one of its steepest single-day declines since the 2020 Covid-19 crash, falling nearly 15 per cent following the February tariff shock.
Ethereum (ETH)’s 1-month implied volatility rose above 100 per cent, double the previous range. Bitcoin’s correlation with equities intensified during this risk-off phase, while correlations with hedges like gold have begun to rise, indicating a move that may change how institutional investors treat digital assets in diversified portfolios.
Macro forces
In contrast to previous crypto downturns triggered by internal shocks like regulatory crackdowns or protocol flaws, the present downturn is driven by macro forces like tariff escalations, inflation fears, and uncertain central bank responses, Binance shared.
Volatility is expected to persist in the medium term, especially if the US-EU tariff standoff deepens or inflation metrics surprises to the upside. The Federal Reserve’s actions will be key, and any signs of tighter policy could reduce investor appetite for risk.
If macroeconomic conditions stabilise, new narratives emerge, or crypto reclaims its function as a long-term hedge, renewed growth could occur. Until then, markets may stay range-bound and reactive to macro headlines.
Ashish Singhal, the co-founder of CoinSwitch shared, “It’s been a big week for global crypto markets. Bitcoin slipping below $75K is part of the larger risk-off sentiment we’re seeing now. While this might feel like a setback, it’s a pause in a much bigger journey. Volatility is not new to crypto.”
Standout year for crypto
He added that 2024 was also a standout year for crypto. “The key is to stay informed, manage your risk smartly, and keep your focus on the long-term potential. Because, in this space, volatility is not a bug—it’s part of the growth journey.”
Himanshu Maradiya, Founder & Chairman, of CIFDAQ Group, shared it views this period as an opportunity for long-term growth rather than a setback, as market corrections are a natural part of the broader financial cycle. With increasing institutional participation, the digital asset space is well-positioned to emerge stronger.
“It is also crucial to make informed, strategic selections rather than opting for random picks, as careful due diligence can significantly enhance portfolio resilience during turbulent times. We encourage our investors to focus on the long-term potential of blockchain technology and digital assets, reflecting our ongoing commitment to sustainability and market integrity,” said Maradiya.
Published on April 9, 2025
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