In a sharp downturn that rattled cryptocurrency investors, Bitcoin plunged more than 5% on Monday, dipping below $65,000 for the first time in weeks, following U.S. President Donald Trump's announcement of plans to impose 15% global tariffs. The cryptocurrency, often touted as a hedge against traditional market volatility, traded as low as $64,816.80 by midday, marking a stark contrast to the early gains in Asian stock markets amid the renewed uncertainty over trade policies.
The tariff hike, unveiled late last week, has injected fresh volatility into global financial markets, with risk assets like cryptocurrencies bearing the brunt. According to market analysts, the move exacerbates ongoing concerns about escalating trade tensions, potentially disrupting international supply chains and investor confidence. Bitcoin's slide comes on the heels of a broader sell-off that began in October 2025, when the digital asset surged past $125,000 before entering a prolonged correction phase.
Year-to-date, Bitcoin has shed 26% of its value, and it is down more than 47% from that October peak, reflecting a turbulent start to 2026 for the world's largest cryptocurrency by market capitalization. Ether, the second-most traded crypto and the native token of the Ethereum network, fared even worse, dropping nearly 6% to $1,865.70. Trading volumes remained subdued, underscoring a lack of conviction among investors as they navigate multiple headwinds.
"We believe that the sudden uptick in tariff rates is causing investors to sell crypto assets in anticipation of a more serious market decline," said Jeff Mei, chief operating officer at BTSE, a global blockchain technology company. Mei pointed to compounding factors, including a significant U.S. military buildup in the Middle East around Iran, which he said heightens the risk of armed conflict that could ripple through global trade flows.
President Trump signaled last Thursday that he would decide within the next 10 days whether to authorize strikes against Iran, a development that has amplified geopolitical tensions. Reports indicate a massive deployment of U.S. forces to the region, including naval assets and air support, though official details on the scale remain limited. Investors, already wary of trade disruptions, are now factoring in the potential for broader regional instability.
Markus Thielen, head of research at 10x Research, a market intelligence platform, offered a more nuanced view of Bitcoin's decline. He attributed the drop not to a single headline but to underlying issues like weak liquidity and low market conviction. "The downturn fits a typical bear-market phase characterized by low volumes and uncertainty tied to U.S. midterm elections," Thielen said, forecasting further downside that could push Bitcoin toward $50,000 before stabilizing.
Thielen's assessment aligns with patterns observed in previous crypto cycles, where prolonged uncertainty leads to capitulation selling before a recovery. The analyst noted that the current environment echoes the post-halving corrections seen in 2018 and 2022, though he emphasized that external factors like tariffs and elections are accelerating the pressure this time around.
Adding to the divergence in asset classes, spot gold prices rose about 1.5% on Monday, climbing to around $2,650 per ounce as investors sought traditional safe-haven assets. This shift highlights Bitcoin's decoupling from its "digital gold" moniker—a term popularized by figures including Federal Reserve Chair Jerome Powell—who has occasionally drawn parallels between the two in discussions of monetary policy and inflation hedges.
Earlier this month, on February 5, Bitcoin hit a more than one-year low of $63,119.80, prompting speculation about the drivers behind the sustained weakness. Matt Hougan, chief investment officer at Bitwise Asset Management, which oversees more than $15 billion in assets including crypto exchange-traded funds, dismissed the idea of a singular catalyst. Instead, he pointed to the cryptocurrency market's well-documented four-year cycle, where post-peak retracements are commonplace.
"The current retracement mirrors patterns seen in past downturns," Hougan said, attributing much of the slide to investors rotating capital into gold and artificial intelligence-related stocks. He also cited lingering concerns over Kevin Warsh, Trump's nominee for Federal Reserve chair, whose potential policies could influence interest rates and liquidity in risk markets. Additionally, Hougan referenced broader "quantum risk," alluding to emerging threats from quantum computing that could challenge blockchain security in the long term.
Bitwise's perspective underscores the cyclical nature of crypto markets, which have historically rebounded strongly after bear phases. However, the firm's heavy exposure to crypto ETFs positions it as a stakeholder in the sector's recovery, potentially influencing its optimistic undertone on eventual stabilization.
The tariff announcement itself builds on Trump's long-standing emphasis on protectionist policies, first prominent during his initial term. The proposed 15% levy on global imports aims to bolster domestic manufacturing but has drawn criticism from economists who warn of retaliatory measures from trading partners like China and the European Union. Asian equities, including Japan's Nikkei 225 and Hong Kong's Hang Seng, edged higher in early trading on Monday, suggesting that regional optimism about stimulus measures is temporarily outweighing tariff fears.
Geopolitical risks tied to Iran add another layer of complexity. The U.S. military presence in the Middle East has intensified since early 2025, with deployments to bases in Qatar, Bahrain, and the United Arab Emirates. While Trump has not detailed the rationale beyond countering Iranian influence, sources close to the administration indicate that intelligence reports of nuclear advancements are a key concern.
As the market digests these developments, cryptocurrency exchanges reported heightened activity in stablecoins like Tether, which investors use as a temporary refuge during volatility. Regulatory watchers in Washington are monitoring how the tariff policy might intersect with ongoing debates over crypto taxation and oversight, especially with midterm elections looming in November 2026.
Looking ahead, analysts like Thielen anticipate a bottoming process that could extend through the spring, with Bitcoin potentially testing lower supports before renewed buying interest emerges. For now, the combination of trade wars, election jitters, and Middle East tensions has left the crypto space in a precarious position, far from the highs that fueled last year's bull run. Investors remain on edge, waiting for clarity from the White House on both tariffs and foreign policy moves.