The world’s markets took a gut punch on Friday after U.S. President Donald Trump threatened a “massive increase” in tariffs on Chinese goods, reigniting fears of a new trade war. The move — framed as retaliation for Beijing’s recent export controls on rare earth metals — triggered a sharp selloff across equities, commodities, and crypto. Is the bull run over? Or is this another Trump fake out?
Bitcoin, which only days ago hit a record high above $126,000, plunged below $106,000 before briefly stabilizing. Ether (ETH), Solana (SOL), and XRP followed suit, with losses ranging from 4% to 7% in late U.S. trading. Crypto-adjacent equities like Coinbase (COIN), Robinhood (HOOD), and Circle (CRCL) shed between 5% and 6%, while MicroStrategy (MSTR) slipped 3%.
It wasn’t just digital assets bleeding. The S&P 500 dropped 3.6%, the Nasdaq slid 3.3%, and WTI crude cratered nearly 4% to fall below $60 — its weakest level since early May. Meanwhile, gold surged past $4,000 per ounce, proving yet again that when fear takes hold, the old gods of finance still command the most faith.
Bitcoin dropped sharply, crashing on Trump Tariff fears, Source: BNC
Deja Vu for the Global Economy
If this all feels familiar, that’s because it is. In 2018, Trump’s tariff war with China rattled global markets and shaved trillions off valuations before a partial truce restored calm. Fast forward to 2025, and the same script is playing out — only this time, the stakes are higher.
China’s rare earth metals are essential for semiconductors, EV batteries, and defense technology. By tightening export controls, Beijing is striking at the heart of Western tech dominance — and Trump’s response signals a return to economic brinkmanship.
The U.S. is already in a fragile position: inflation is sticky, rates remain high, and global growth is slowing. For traders, the tariff escalation feels like lighting a match in a room full of gasoline.
Crypto’s Myth of Independence Just Took a Hit
Bitcoin’s retreat exposed a hard truth that crypto optimists don’t like to admit: it’s not a hedge against chaos — at least not yet. When real panic hits, investors still run to gold, not digital gold.
Institutional players that now dominate crypto markets treat BTC more like a high-beta tech stock than a monetary revolution. When Nasdaq wobbles, Bitcoin tends to stumble harder. That correlation, once denied, is now impossible to ignore.
The irony? Bitcoin’s record-breaking rally earlier this week — fueled by optimism around ETFs and the “AI-fueled productivity boom” narrative — collapsed just as fast as it began. Monday’s FOMO turned to Friday’s panic, and the same traders who couldn’t buy fast enough were suddenly desperate to sell.
This Isn’t Just About Tariffs — It’s About Fragility
While Trump’s announcement triggered the day’s bloodbath, the underlying rot has been visible for months.
Global markets have been buoyed by easy liquidity, speculative AI bets, and a blind belief that tech stocks could only go up. Even the IMF and Bank of England warned this summer that AI hype and overvalued equities could lead to an “abrupt correction.” Friday might be that moment arriving in real time.
Leverage is another accelerant. Crypto markets remain overextended, with traders using high margin and leverage to chase upside. When Bitcoin broke $120K, billions in derivative positions automatically liquidated, compounding the selloff.
Trump’s brutal China Tariff announcement crashed global market, source: Truth Social
The New Trade War Is Just Getting Started
If Trump follows through on his threat — and history says he will — the next few weeks could see a full-blown economic standoff. The U.S. depends on China for nearly 70% of certain rare earth inputs vital to defense and green technologies. Cutting off that supply could paralyze sectors from EVs to smartphones.
And this time, China is more prepared. Over the past few years, it’s deepened its trade ties with Russia, Brazil, and the Middle East, while building out domestic supply chains and increasing gold reserves. The world’s two largest economies are now more economically decoupled — and ideologically hostile — than at any time in decades.
Trump’s tariff threat was the spark, but the explosion was years in the making. Markets are over-leveraged, investors are overconfident, and geopolitics are once again the wildcard.
Crypto wanted to be the escape hatch from traditional finance — but for now, it’s still just another passenger on the same sinking ship.
Gold is glowing, oil is tanking, and the “everything rally” of 2025 looks like it just met its reckoning. Still, this has happened before, and after the shock, markets have recovered. The bull market might still not be over. For investors looking for a good entry into Bitcoin, this might be it.
