Bitcoin fell below $109,000 on May 24 after former President Trump revived trade war rhetoric, threatening 50% tariffs on EU imports and 25% levies on iPhones. This sparked risk-off sentiment across financial markets, with BTC’s 3.4% intraday drop marking its steepest decline since mid-May. The crypto market’s reaction underscores its growing sensitivity to macro geopolitical developments.
Trade wars typically strengthen the US dollar as investors seek safe-haven assets, creating headwinds for bitcoin’s dollar-denominated price. The announcement disrupted a week-long rally fueled by institutional adoption news, demonstrating how traditional market dynamics increasingly influence crypto valuations. Bitcoin’s correlation with risk assets appears to be reasserting itself despite its inflation-hedge narrative.
Market observers note that sustained trade tensions could test bitcoin’s resilience as a macroeconomic hedge. While some view the pullback as healthy profit-taking after record highs, others warn that prolonged dollar strength from protectionist policies might delay BTC’s next leg upward.
