Tariff Turmoil [Market Update]

The past few days in the trenches have been quite brutal.

We experienced the largest liquidation event in crypto history, to a near V-reversal recovery - though alts and memecoins haven’t recovered quite the same.

Those liquidated watched the market move forward without them.

Let’s break it down 👇

• What just happened in the last couple of days?
• Is crypto finished?
• What’s next from here?

Recapping the past couple days

Note: Tariffs are taxes on imports from other countries, increasing overall prices.

1. Donald Trump announces a 25% tariff on Mexico and Canada and 10% on China, sparking a fresh trade war with America’s top three trade partners.
2. This triggers the largest liquidation event in crypto history, wiping out $2.2B - more than LUNA and FTX. BTC drops to $92K, ETH to $2.1K.
3. Trump pauses tariffs for 30 days, leading to a market rebound - BTC climbs back above $100K.
4. Trump signs an executive order to create a U.S. sovereign wealth fund.
5. Eric Trump shills ETH, tweeting “it’s a great time to add ETH”, while WLFI continues to hold a majority ETH position.
6. China retaliates with 10-15% tariffs on US oil, agricultural equipment, coal, and LNG, causing a slight market dip (BTC falls back under $100K).
7. The Sovereign Wealth Fund Plan is due in 90 days.
8. The SEC’s crypto enforcement unit gets scaled back (50 lawyers and staff impacted).
9. Crypto Czar David Sacks holds a Digital Asset Strategy press conference, with an emphasis on the benefits of stablecoins for the U.S Dollar.

From all this, it’s clear how volatile the market has become.

TL;DR: The “tariff wars” were short-lived, but market uncertainty remains due to Trump’s unpredictable decision-making.

It’s all a political game - Trump is using economic leverage to push for the deals he wants. @innerdevcrypto explains it well:

The impact of a “tariff war”

When two countries impose tariffs on each other, imported goods become more expensive, leading to higher inflation.

• Higher inflation = Less chance the Fed cuts interest rates.
• Higher rates = Lower liquidity = Risk assets (like crypto) sell off.

Beyond that, escalating trade tensions create broader market uncertainty, which historically leads to volatility and sell-offs across crypto.

Where are we now?

Right now, it feels like a single person (cough Trump) or entity is steering the market. At the same time, good news barely moves the needle - either because the market already expects it to play out or sees it as a non-event.

The Majors

While BTC remains resilient, ETH has taken a significant hit relative to BTC.

At the time of writing, ETH/BTC sits at 0.028, the lowest level since early 2021.

BTC has been ranging between $89K and $109K for the past 2.5 months, yet overall sentiment is bearish, largely due to altcoin underperformance.

• BTC Dominance (BTC.D) has climbed to 61%,
• OTHERS (altcoin market cap) has dropped to $275B.
• The Crypto Fear & Greed Index recently fell to 39, the lowest since October 2024.

Memecoins & AI Agents

The two hottest sectors of the past few months - Memecoins and AI Agents - have suffered the worst losses, with many projects down 80% or more.

Memecoins - down 36% in the last 30D

Total market cap: $74B

AI Agents: Down 62% in the last 30 days

Total market cap: $7.78B

What caused the crash?

1. $TRUMP and $MELANIA sucked liquidity from other memecoins.
2. DeepSeek’s launch has forced a revaluation of most AI projects, exposing many as vapourware.

Is the AI Agent narrative dead?

Not necessarily. The recent crash has simply filtered out low-quality projects - the ones that slapped “AI” as a buzzword without real innovation.

The next wave will come when:

✅ AI technology meaningfully improves agent capabilities.

✅ AI platforms build real user bases and adoption grows.

Going forward, the market will be more selective - so focus on teams with devs who are actively building.

Will we see a continuation of “up only”, or is this just a relief bounce?

In the short term, sentiment remains bearish, and we’re likely in for a period of volatile chop. However, macro-political events could shift the landscape at any moment. Mid-to-long term, multiple signals still point to a bullish outcome.

Long answer:

Near-term price action will be dictated by a mix of bullish and bearish factors:

🔹 Bullish catalysts:

• Potential updates on the sovereign wealth fund
• Further crypto-friendly policy announcements from Trump’s administration
• The largest liquidation event in crypto history resetting open interest

🔹 Bearish risks:

• Uncertainty surrounding Trump’s tariff actions
• Market exhaustion—good news isn’t sparking rallies
• Potential liquidity drains from rate policy and macro shifts

Expect heavy volatility, particularly in altcoins.

Mid-to-Long Term Outlook

This retracement could present an accumulation opportunity. Once market uncertainty settles and pro-crypto policies take effect, we may enter the next “golden bull run.”

Bitwise CEO Matt Hougan shared a great thread on how this cycle is evolving. His key takeaway? Mainstream institutional adoption moves at a different pace than crypto-natives expect.

Wall Street and mainstream institutions are like giant tankers, not speedboats.

This suggests a potential deviation from the traditional four-year cycle. While pullbacks will still happen, they may be shorter and shallower - specially for Bitcoin and Ethereum.

Final Thoughts

With alt prices struggling, many assume we’ve topped - but if true, it would be the first real break from the 4-year crypto cycle. On a mid-term horizon, another bear market seems unlikely. Trump, as a businessman, values his legacy, and he likely wouldn’t want to start his term by triggering a market downturn.

That being said, in crypto, anything is possible - it’s the most volatile asset class in the world.

Never invest more than you can afford to lose, and remember: the best things in life are free.

Disclaimer: none of this is financial advice. Readers are advised to always do their own research.