Bitcoin fell as much as 5% on Monday, briefly dropping below the $65,000 mark, after U.S. President Donald Trump announced plans to raise global tariffs to 15%, up from the previously indicated 10%. The move injected fresh uncertainty into global markets and triggered a renewed risk-off rotation across asset classes.

Although the world’s largest cryptocurrency recovered part of its losses — trading around $65,700 mid-morning — the damage reflects a broader structural trend that has been unfolding since October, when Bitcoin crossed $125,000. Since that peak, Bitcoin has declined over 47%, and it is now down approximately 26% year-to-date.

The pullback extends beyond Bitcoin. Ethereum remains below $2,000, while major altcoins including XRP, BNB, Solana, Dogecoin, Cardano, and Hyperliquid fell as much as 8% to 9%. Over 136,000 traders were liquidated within 24 hours, totaling $458 million — with 92% of positions being long.

At the same time, traditional equity markets showed mixed resilience. Asian equities rose in early trading, while U.S. futures edged modestly lower. Gold surged above $5,000, approaching fresh all-time highs.

The divergence is striking.

While Bitcoin was once pitched as “digital gold,” the latest episode suggests that in periods of geopolitical stress and tariff uncertainty, crypto behaves less like a hedge and more like a high-beta risk asset.

To understand the implications, one must examine the interplay between macroeconomics, investor psychology, market cycles, liquidity conditions, and crypto’s evolving role in global portfolios.

Build the future you deserve. Get started with our top-tier Online courses: ACCA, HESI A2, ATI TEAS 7, HESI EXIT, NCLEX-RN, NCLEX-PN, and Financial Literacy. Let Serrari Ed guide your path to success. Enroll today.

Tariffs and Risk Assets: Why Crypto Reacted Sharply

President Trump’s announcement to raise global tariffs to 15% adds renewed pressure to an already fragile trade environment.

Tariffs function as:

• Inflationary mechanisms,
• Corporate margin squeezers,
• Supply-chain disruptors,
• Geopolitical signaling tools.

Markets typically respond to tariff increases with:

• Volatility in equities,
• Rotation into defensive assets,
• Currency fluctuations,
• Safe-haven flows into gold and Treasuries.

Crypto’s reaction reflects its current positioning within global capital flows.

Despite narratives framing Bitcoin as a hedge against fiat instability, institutional allocation patterns increasingly categorize it as:

• A speculative growth asset,
• A liquidity-sensitive instrument,
• A volatility amplifier.

When liquidity tightens or uncertainty rises, crypto often sells off first.

The Four-Year Cycle Thesis

Bitwise CIO Matt Hougan attributed Bitcoin’s slide primarily to the crypto market’s historical four-year cycle.

Historically, Bitcoin has followed a repeating pattern tied to halving events:

• Post-halving rally,
• Peak euphoria,
• Extended correction,
• Consolidation before the next expansion.

Past downturns occurred in:

• 2014–2015,
• 2018,

The current retracement mirrors previous cycle behavior.

However, this cycle differs in one key respect: institutional participation is significantly higher than in earlier eras.

Bitwise alone manages over $15 billion in crypto-focused assets.

Institutional involvement increases market depth — but it also introduces more systematic risk management behavior.

Large funds rebalance aggressively during drawdowns.

Liquidations and Sentiment Collapse

The liquidation of 136,000 traders totaling $458 million underscores the leverage embedded in the system.

92% of liquidations were long positions.

This indicates:

• Traders were positioned for upside continuation,
• Leverage amplified downside moves,
• Forced selling intensified volatility.

The Crypto Fear & Greed Index fell to 5–6, one of the lowest readings since 2018 — and comparable to the COVID crash of March 2020.

Extreme fear levels historically precede:

• Short-term bounces,
• Volatility compression,
• Accumulation phases.

But they do not guarantee immediate recovery.

ETF Outflows and Liquidity Tightening

Bitcoin’s price action also reflects ETF dynamics.

Spot Bitcoin ETFs, once a catalyst for institutional inflows, have seen periods of outflows amid:

• Profit-taking,
• Rebalancing,
• Liquidity tightening,
• Macro risk concerns.

When ETFs experience redemptions, underlying BTC must be sold.

This adds supply pressure during fragile market conditions.

Liquidity tightening compounds the effect.

Global central banks remain cautious.

While inflation has moderated in some economies, tariff uncertainty could complicate monetary easing trajectories.

Crypto thrives in abundant liquidity environments.

When liquidity contracts, volatility increases.

Cross-Asset Divergence: Gold vs Crypto

Gold trading above $5,000 underscores a classic safe-haven dynamic.

In times of geopolitical uncertainty:

• Gold often rallies,
• Treasuries stabilize,
• Risk assets retrench.

Bitcoin’s inability to mirror gold during this episode highlights a structural debate:

Is Bitcoin truly “digital gold”?

Or is it still a speculative technology asset?

The evidence suggests that during acute risk-off episodes, gold retains traditional safe-haven dominance.

Bitcoin, while decentralized, remains liquidity-sensitive.

Equity Market Contrast

Traditional markets reacted differently.

Germany’s DAX fell modestly, the CAC 40 was flat, and Britain’s FTSE 100 showed minimal movement. Asian indices such as South Korea’s Kospi and India’s Sensex posted gains.

Meanwhile:

• S&P 500 futures slipped 0.2%,
• Dow futures fell 0.3%,
• Nasdaq futures declined 0.3%.

These declines were mild compared to crypto’s drawdown.

This divergence reinforces crypto’s higher volatility profile.

Technical Levels: $60,000 as a Test Zone

Analysts suggest Bitcoin may test $60,000 before a meaningful rebound.

Immediate resistance stands at $68,500.

Technical dynamics indicate:

• Psychological support near $60,000,
• Resistance near $70,000,
• Consolidation is likely if volatility subsides.

Ethereum remains below $2,000.

Until Bitcoin reclaims higher levels, retail conviction remains subdued.

Altcoins: Amplified Volatility

Major altcoins dropped between 8% and 9%.

Altcoins historically:

• Outperform during bull phases,
• Underperform during corrections.

Higher beta magnifies downside pressure.

Tron’s modest gain stands as an anomaly, reflecting selective rotation rather than broad resilience.

Historical Comparison: October High to Present

Bitcoin’s October high of $126,210.50 marked peak optimism.

Since then, a nearly 50% retracement has unfolded.

Comparatively:

• 2018 correction exceeded 80%.
• 2022 drawdown approached 75%.

Thus, while severe, the current correction remains milder than previous cycle crashes.

However, the macro backdrop differs.

This cycle coincides with:

• Higher institutional exposure,
• Regulatory evolution,
• ETF integration,
• Greater mainstream adoption.

The correction therefore tests crypto’s structural maturity.

One decision can change your entire career. Take that step with our Online courses in ACCA, HESI A2, ATI TEAS 7, HESI EXIT, NCLEX-RN, NCLEX-PN, and Financial Literacy. Join Serrari Ed and start building your brighter future today.

Regulation Uncertainty

Regulatory ambiguity remains a persistent headwind.

Concerns about future cryptocurrency regulation contribute to investor caution.

Tariff escalation increases the likelihood of broader economic stress, which could accelerate regulatory oversight across financial markets.

Crypto remains politically sensitive.

Regulatory clarity — or lack thereof — directly affects valuation multiples.

Why This Matters for Global Markets

Bitcoin’s reaction reflects broader truths about capital allocation:

1. Crypto remains highly sensitive to macro shocks.
2. Liquidity conditions dominate short-term pricing.
3. Correlation with equities increases during stress.
4. Gold retains traditional hedge status.

Crypto’s divergence from Asian equities in this episode reveals that Bitcoin is not yet fully decoupled from risk sentiment.

For institutional investors, portfolio allocation frameworks treat crypto as:

• High-risk satellite exposure,
• Volatility enhancer,
• Tactical trade rather than defensive anchor.

Risks to Monitor

Several risks could extend volatility:

1. Escalating Trade Tensions

Further tariff increases could amplify uncertainty.

2. Monetary Tightening

If inflation resurges, easing cycles may delay.

3. ETF Outflows

Sustained redemptions could pressure prices.

4. Regulatory Shifts

Unexpected enforcement actions may unsettle markets.

5. Leverage Unwinding

Additional liquidation cascades could accelerate downside.

Long-Term Outlook: Structural Adoption vs Cyclical Volatility

Despite current weakness, long-term structural drivers remain:

• Institutional ETF infrastructure,
• On-chain accumulation by large holders (“whales”),
• Stablecoin ecosystem expansion,
• Tokenization growth,
• Increased global retail participation.

On-chain data suggests whales are accumulating during declines.

V-shaped accumulation patterns often precede stabilization.

However, recovery depends on:

• Liquidity normalization,
• Macro stabilization,
• Regulatory clarity.

Looking Ahead

Investors should watch:

• $60,000 support zone,
• ETF flow data,
• Tariff policy developments,
• Inflation trends,
• Federal Reserve signaling.

If Bitcoin stabilizes above $60,000 and liquidity conditions improve, a recovery phase may emerge.

If macro pressure intensifies, extended consolidation could follow.

Conclusion: Correction, Not Collapse — But Fragility Remains

Bitcoin’s drop below $65,000 amid tariff escalation underscores crypto’s sensitivity to macro uncertainty.

While not unprecedented within its historical volatility framework, the correction highlights unresolved structural questions:

• Can Bitcoin behave as a safe haven?
• How resilient is institutional demand?
• Will regulatory clarity anchor long-term growth?

For now, crypto remains the most volatile major asset class — reacting sharply to geopolitical shocks.

Yet its resilience above prior cycle lows suggests that this may be a correction within a broader maturation process rather than systemic collapse.

The next phase will depend not only on technical levels — but on how global economic conditions evolve.

Ready to take your career to the next level? Join our Online courses: ACCA, HESI A2, ATI TEAS 7 , HESI EXIT  , NCLEX – RN and NCLEX – PN, Financial Literacy!🌟 Dive into a world of opportunities and empower yourself for success. Explore more at Serrari Ed and start your exciting journey today! ✨

Track GDP, Inflation and Central Bank rates for top African markets with Serrari’s comparator tool.

See today’s Treasury bonds and Money market funds movement across financial service providers in Kenya, using Serrari’s comparator tools.

photo source: Google

By: Elsie Njenga 

24th February,2026