Tariff threat triggered sharp drop in Bitcoin and altcoin prices after new all-time high.
Retail sentiment shifted quickly as traders reacted to paused but looming July 9 tariff decision.
Crypto markets now closely mirror global policy shifts, increasing short-term volatility risks.
A sudden shift in U.S. trade policy last week almost stalled the crypto market’s upward momentum, just after Bitcoin recorded a new all-time high. The digital asset hit $112,000 before a 50% tariff threat on European Union imports from President Trump prompted a pullback across both Bitcoin and altcoins.
Although the tariff was paused two days later until July 9, the announcement was enough to spark caution among traders and dampen short-term sentiment across crypto markets.
On May 22, Bitcoin surpassed its previous high of approximately $109,000, set earlier this year on Inauguration Day. The move was short-lived. Within 24 hours, markets reacted sharply to Trump’s surprise tariff announcement, causing a near 4% dip in Bitcoin’s price and heavier losses in several altcoins.
According to on-chain analytics platform Santiment, the spike in tariff-related mentions closely matched the downturn in crypto prices. This marked the largest increase in tariff discussions since the April 7–9 capitulation event, which had previously signaled a short-term buying opportunity.
The unpredictable tariff swings put a pin in the Bitcoin all-time high balloons last week, then helped a late week rally last week. But with everything on pause, can crypto continue to climb? We go through the latest timelines, and what to watch. https://t.co/sVhoabLYBQ pic.twitter.com/fhoZDgSz1o
— Santiment (@santimentfeed) May 27, 2025
The pause in the tariff decision came quickly, but its impact was already visible. European equities fell, the euro weakened, and U.S. futures dropped. Crypto markets, which often move independently from traditional finance headlines, showed a rare alignment as retail investors reduced exposure and shifted away from aggressive altcoin positions.
Traders React to Rapid Policy Changes
The market’s change in direction mirrored previous reactions to similar tariff-related headlines. Over the past seven weeks, Trump’s trade tactics have followed a cycle of aggressive threats followed by temporary de-escalation. This recurring strategy has added uncertainty to global markets, including digital assets.
Although the pullback was milder than earlier disruptions, it pointed out how sensitive crypto has become to external policy shifts. The July 9 deadline now stands as a possible trigger point. If tariffs are reinstated, the EU has indicated it may introduce countermeasures, raising the possibility of increased volatility.
