What Happened?
Due to President Trump’s announcement of increased tariffs, global market sell-offs ensued, leading to a decline of over $4 billion in the total amount of Bitcoin held by enterprises in a short period. This demonstrates the sensitivity of the Bitcoin market to macroeconomic events.
Analysts believe that Bitcoin is on the verge of the largest price correction in this bull market cycle. According to the analysis by the research director of CryptoQuant, the current decline of Bitcoin from its historical peak is expected to be the largest in this bull market cycle.
Market corrections are not necessarily a bad thing; they can be a healthy adjustment preparing for greater gains after a deep cleansing. However, they may also signal a potential exhaustion of market forces, a weakening of trends, or even a reversal. The subsequent development of the market requires close monitoring.
Total Bitcoin Holdings by Enterprises Shrink Collectively
Due to President Trump’s announcement of increased tariffs on April 2, a global market sell-off occurred, causing the total Bitcoin holdings by enterprises to collectively shrink by over $4 billion.
According to data from BitcoinTreasuries.net, the total Bitcoin holdings of enterprises dropped from nearly $59 billion on April 2 to approximately $54.5 billion on April 7. This downward trend closely aligns with the timing of Trump’s tariff announcement, indicating the Bitcoin market’s sensitivity to changes in macroeconomic policy.
The tariff policy not only directly impacted overall market sentiment but also negatively affected the stock prices of publicly traded companies holding large amounts of Bitcoin. For example, an ETF tracking different corporate Bitcoin holders (Bitwise Bitcoin Standard Corporations ETF) has declined by over 13% since the tariff announcement. Similarly, the stock prices of firms known for significant investments in Bitcoin have also dropped by more than 13% since April 2.
The recent decline in Bitcoin prices has also placed Michael Saylor’s strategy on the defensive, as the company did not purchase any Bitcoin during the decline from March 31 to April 6.
Additionally, data from Strategytracker shows that the company spent $35.65 billion on its Bitcoin holdings, and its five-year holding period return is only 17%.
The drop in stock prices reflects market concerns about Bitcoin as a corporate asset, especially in the context of high volatility and regulatory uncertainty, contrasting sharply with traditional companies’ preference for low-risk assets like U.S. Treasury bonds.
The impact of the tariff policy undoubtedly casts a shadow over the strategy of incorporating Bitcoin into corporate balance sheets and may prompt companies to reassess the risks and returns of their cryptocurrency investments.
What Will Happen Next in the Crypto Market?
Trump and his team’s implementation of upgraded tariffs have undoubtedly introduced new variables into international trade and financial markets. In the face of this policy that could trigger widespread economic ripple effects, investors and observers in the cryptocurrency market cannot help but ponder: how will crypto assets respond in the shadow of potentially heightened trade barriers?
According to an analysis by Julio Moreno, research director at CryptoQuant, Bitcoin has currently fallen 26.62% from its historical peak of $109,500, which is expected to be the largest correction in this bull market cycle.
Market Correction: Sometimes referred to as a market adjustment, it refers to a significant drop in the prices of the stock market, a specific index (such as the Taiwan Weighted Index or the U.S. S&P 500 Index), or other assets (like cryptocurrencies) from recently set highs.
Although the recent sharp decline in Bitcoin prices has caused considerable panic among investors, the cryptocurrency market has actually experienced multiple market corrections in the past. For example, Bitcoin saw an 83% drop in 2018 and a 73% correction in 2022, both of which far exceeded the current 26.62% decline.
What Does a Market Correction Represent?
In fact, a market correction is not necessarily a bad thing, as larger corrections can more effectively cleanse excessive leverage and short-term speculators, leading to a healthier market structure and laying a more solid foundation for stable gains in the next phase. After experiencing the largest corrections, if the market can stabilize, rebounds may be stronger.
Additionally, Bitcoin has often seen corrections of 30%-40% or even deeper during past bull market cycles. If this correction can hold key technical or psychological support levels and remains within the historical range of bull market corrections, it may just be a severe but still “normal range” shakeout, and the bull market trend has not ended.
For long-term bullish investors in Bitcoin, if the largest correction in the cycle is considered temporary, it becomes an excellent opportunity to buy on dips or increase positions.
However, a market correction can also serve as a warning sign. If the correction reaches a new high in this cycle, it may indicate that the buying power or the overall upward momentum of the market has shown more evident exhaustion compared to previous corrections. This may require a longer recovery time, or the future upward potential may be limited.
Additionally, this deep correction may not only reflect internal market factors but could also express broader macroeconomic concerns (such as tariff escalations, persistent inflation pressures, uncertainties in central bank monetary policies, recession risks, geopolitical tensions, etc.), which have finally had a significant impact on Bitcoin as a risk asset.
If the depth or duration of the correction far exceeds the typical range of historical bull market cycles, it may lead market participants to start questioning the current cycle phase, or whether the structure and driving factors of this cycle are fundamentally different from previous ones, thus triggering anxiety and panic among investors.
Regardless, the current cryptocurrency market has reached a critical observation point and potential turning point. It could be a healthy adjustment preparing for greater gains after a deep cleansing, or it may signal a potential exhaustion of market forces, weakening trends, or even reversals. Close attention to subsequent price actions, market structures, and macro backgrounds is needed to determine its final implications.
References: cointelegraph, cointelegraph