The performance of Bitcoin is largely driven by the weakness in broader risk-driven markets, amid increasing uncertainty over further U.S. tariffs and their economic impact.
The escalation of rhetoric between the United States and China has raised concerns that the two countries will not reach a lasting trade agreement in the near term, prolonging the painful exchange of tariffs between them and putting pressure on the global economy.
Risk appetite has also been affected by reports that nuclear talks between the United States and Iran were on the brink of collapse, while geopolitical tensions between Russia and Ukraine remained high after ceasefire talks on Monday yielded little progress.
While Bitcoin and cryptocurrency markets are not directly affected by tariffs or geopolitical issues, they are susceptible to any shifts in sentiment due to their highly speculative nature. This characteristic has impacted cryptocurrency markets in recent weeks, as optimism over more favorable cryptocurrency regulation in the United States has faded.
