Bitcoin (BTC) has suffered a sharp decline, dropping over 11% over the weekend to $92,000 before stabilizing at $95,000.
Many investors are asking: Why is Bitcoin down today?
The downturn follows President Donald Trump’s announcement of 25% tariffs on imports from Canada and Mexico, which triggered a flight to safe-haven assets such as gold and the U.S. dollar.
Below are the key factors behind why Bitcoin is down today.
Trump’s Tariffs and Market Uncertainty
Shares in Europe and Asia have fallen after US President Donald Trump announced tariffs on Canada, Mexico and China, and said tariffs on the EU would “definitely happen”.
The German and French stock markets were down about 2%, with shares in carmakers among the worst hit, while London’s FTSE 100 dropped more 1%.
The US dollar also strengthened on the currency markets, rising to a record high against China’s yuan, while the Canadian dollar plunged to its lowest level since 2003.
The newly imposed tariffs have raised concerns over inflation, economic slowdown, and potential retaliatory measures from trading partners. As a result:
- Gold surged to an all-time high of $2,800 per ounce as investors sought traditional safe-haven assets.
- The U.S. dollar strengthened by 1.3%, making Bitcoin less attractive as a hedge against currency devaluation.
- Ethereum (ETH) dropped 17%, reflecting broader weakness in the crypto market.
Bitcoin’s Correlation with Risk Assets
Despite being considered a store of value, Bitcoin has shown increased correlation with equities, meaning that when traditional markets face risk, BTC often follows suit. So, why is Bitcoin down today?
When traditional markets experience turbulence, Bitcoin often follows. With global stock markets declining due to trade war concerns, Bitcoin has not been immune to the sell-off.
Mass Liquidations Amplify the Crash
Another reason why Bitcoin is down today is the large-scale liquidations in the crypto market. The market correction triggered one of the largest liquidation events in crypto history, with over $10 billion in liquidations, according to Bybit’s CEO Ben Zhou.
- Over 730,000 traders were liquidated, adding to downward pressure on BTC.
- The largest single liquidation was on Binance for an ETH/BTC trade worth $25.6 million.
- Leverage wipeouts forced more investors to sell, further deepening the crash.
I am afraid that today real total liquidation is a lot more than $2B, by my estimation it should be at least around $8-10b. FYI, Bybit 24hr liquidation alone was $2.1B, As you can see in below screenshot, Bybit 24hr liquidations recorded on Coinglass was around $333m, however,… https://t.co/4WLkPxTYF4 pic.twitter.com/woTOHQvNkt
— Ben Zhou (@benbybit) February 3, 2025
Is There a Path to Recovery?
Some analysts remain optimistic about Bitcoin’s long-term trajectory, arguing that economic instability could eventually push more investors toward BTC as a hedge against inflation and government intervention.
“Tariffs might be just a temporary tool, but the permanent conclusion is that Bitcoin is not only going higher—but faster,” said Jeff Park, Head of Alpha Strategies at Bitwise.
However, in the short term, Bitcoin could face further downside if panic selling continues. Analysts warn that BTC could drop to $90,000 unless the market stabilizes.
With ongoing geopolitical uncertainty and regulatory developments, Bitcoin’s next move will largely depend on macroeconomic conditions and investor sentiment.
