Potential Impacts of Trump’s Proposed EU Tariffs on Bitcoin and Market Volatility

• The recent announcement of a 50% tariff on EU imports by President Trump has sent shockwaves through the crypto market, sparking significant volatility.

• Bitcoin, in particular, experienced a decline from a high of $111,000 to about $108,000, reflecting traders’ reactions to heightened geopolitical tensions.

• According to COINOTAG, “The market is caught off guard, transitioning from optimism to caution as trade disputes loom.”

President Trump’s 50% tariff on EU imports has rattled the crypto market, leading to significant volatility and liquidations.

Bitcoin’s Volatility Amidst Trade Tensions

Following Trump’s announcement, Bitcoin fell to $108,000 before making a slight recovery, highlighting the market’s response to potential economic ripple effects. The overall crypto market has witnessed a 4% decline amid mounting uncertainties.

Bitcoin Price Chart Today. Source: TradingView

The latest data from Coinglass indicates a staggering $64.13 million in liquidations within just four hours, with long positions facing the brunt at $34.05 million while short positions accounted for $30.09 million.

In detail, Bitcoin saw $24.4 million in liquidations, while Ethereum recorded $15.16 million.

The long-short ratio of Bitcoin is currently balanced, signifying market indecision. Yesterday, long positions comprised 54%, but the ongoing volatility leaves traders uncertain about the next market direction.

Bitcoin Long-Short Ratio Over the Past Month. Source: Coinglass

Altcoins, notably Solana and XRP, have also experienced marked fluctuations, indicative of increasing market volatility. Retail investors seem particularly vulnerable, with many caught off guard by the abrupt change in trade policy.

Macroeconomic Concerns Impacting Crypto

Earlier in the month, the US-China trade agreement provided some assurance to the crypto market, but Trump’s recent tariff declarations have reignited uncertainty. Analysts caution that the tariffs might lead to broader economic repercussions.

The financial markets responded negatively, with European stock indices and US tech shares experiencing declines, reflecting a ripple effect from the escalating trade tensions.

The trade war is back:

After a brief pause, Trump threatens a 50% tariff on the EU starting June 1st and 25% tariffs on Apple.

In 5 days, the S&P 500 has lost -$1.5 trillion in market cap.

What lies ahead? Traders need to keep an eye on the bond market.

See details

– The Kobeissi Letter (@KobeissiLetter) May 23, 2025

The liquidation heatmap illustrates a market grappling with caution and attempts at recovery. As traders watch for EU responses or diplomatic negotiations, the potential for an intensified trade dispute looms large.

Crypto Liquidations Heatmap. Source: Coinglass

In the last 24 hours alone, over 162,419 traders were liquidated, amounting to $567.65 million. Although cryptocurrencies have been seen as a hedge against traditional market stresses, the current turmoil indicates they are not immune to external pressures.

As the geopolitical landscape becomes increasingly complex, market volatility is expected to persist, requiring traders to remain vigilant.

Conclusion

The unfolding trade situation poses significant risks for the crypto market. With Bitcoin and other cryptocurrencies exhibiting increased volatility, traders should stay informed and prepare for potential ongoing fluctuations. The focus will be on the EU’s response and potential negotiations that may stabilize or further disrupt the current market dynamics.