Binance Research: Tariff Escalation & Crypto

The report analyzes the impact of the 2025 U.S. trade-war measures on macroeconomics and cryptocurrency markets.

It notes that new tariffs under President Trump – characterized as “the most aggressive since the 1930s” – have triggered global trade tensions.

The study examines how tariff levels and macro trends (inflation, growth, interest rates, Fed outlook) are affecting crypto asset performance, volatility, and correlations.

Market Reaction:  After the tariff announcements, crypto assets fell sharply.

A Binance chart shows crypto market capitalization down ~25.9%, versus an S&P 500 drop of ~17.1%, while gold climbed ~10.3% (hitting new highs).

Cryptocurrencies moved in lockstep with equities, reflecting a classic “risk-off” environment, whereas traditional safe havens (gold, bonds) performed strongly.

Altcoins and high-beta tokens were hit hardest: Bitcoin fell ~19.1% and Ethereum over 40%, while meme and AI-related tokens plunged ~50%.  Most of 2025’s crypto gains were erased in this selloff, and even Bitcoin’s year-to-date return turned negative by early April.

Investor sentiment shifted accordingly: in a recent survey only 3% of fund managers favored Bitcoin in the current trade-war context, versus 58% favoring gold.

In short, the report finds crypto behaving like a high-beta risk asset – demand for digital assets cooled quickly as investors flocked to perceived safety.

Volatility Surge:  The policy announcements also triggered extreme price swings. Bitcoin’s realized volatility spiked above 70% and Ethereum’s above 100% in late February 2025 after sudden tariff news.

Each new tariff update produced large one-day moves (one of Bitcoin’s largest daily drops occurred then). Binance Research observes that in the current high-uncertainty environment, crypto markets are extremely sensitive to policy shocks.

It forecasts continued high volatility until the new tariff regime is fully priced in, with volatility only subsiding once markets digest these policies.

Correlation & Diversification:  The report notes a striking shift in crypto’s relationships with other assets. Initially (late Jan 2025) Bitcoin and equities moved somewhat independently, but as trade-war rhetoric intensified, their 30-day correlation jumped from around –0.32 (negative) in February to +0.47 by March. Meanwhile, Bitcoin’s correlation with gold turned negative (about –0.22 by early April).

These changes indicate that macro factors (trade policy and rate expectations) are dominating crypto behavior for now.

However, over the long term Bitcoin has maintained only moderate ties to stocks (average 90-day correlation ~0.32 since 2020) and low correlation to gold (~0.12).

In previous stress periods (e.g. March 2023 banking turmoil) Bitcoin has re-decoupled from equities.

The report highlights the key question of whether Bitcoin can regain its “non-sovereign, permissionless” appeal. For example, if inflation stays high and the Fed eventually shifts to easing, Bitcoin could be seen again as a hard “inflation hedge” and regain safe-haven status.

Outlook:  Binance Research concludes that in the short term, crypto markets will likely remain choppy and highly sensitive to trade-war news.

The Federal Reserve’s policy pivot will be crucial: a continued hawkish stance would keep pressure on risk assets, whereas a turn to monetary easing could unleash a strong rebound in crypto due to renewed liquidity.

Ultimately, if macro conditions stabilize or new positive narratives emerge (and crypto reclaims its long-term diversification role), a market recovery may follow.

In the meantime, investors are advised to stay diversified, monitor global developments closely, and look for opportunities arising from the market dislocations caused by the ongoing trade conflict.