With investors reacting to the tariff announcements, the total crypto market capitalisation has dropped about 25.9% from January highs — wiping out about $1 trillion in value, says Binance Research.
In its analysis, it says the crypto market is navigating a turbulent macroeconomic landscape as heightened global trade tensions trigger a pronounced ‘risk-off’ shift across asset classes.
The crypto market’s flagship asset Bitcoin has experienced one of its steepest single-day declines since the 2020 COVID crash, falling nearly 15% following the February tariff shock, it added. Concurrently, volatility soared, with Ethereum's 1-month implied volatility rising above 100%, double the previous range.
"The resurgence of trade protectionism is introducing significant volatility across global markets — and crypto is no exception. In the short term, this kind of macro uncertainty tends to trigger a risk-off response, with investors pulling back as they wait to see how things unfold around growth, policy, and trade," said Richard Teng, CEO, Binance.
Looking further ahead, though, this environment could also accelerate interest in crypto as a non-sovereign store of value. Many long-term holders continue to view Bitcoin and other digital assets as resilient during periods of economic stress and shifting policy dynamics, he added.
In the medium term, volatility is expected to persist, especially if the US-EU tariff standoff deepens or inflation metrics surprises to the upside. The Federal Reserve’s response will be pivotal, a shift toward easing could inject liquidity and boost crypto sentiment, while hawkish signals may dampen risk appetite further, Binance Research said in its analysis.
It added that if macroeconomic conditions stabilise, new narratives emerge, or crypto reclaims its function as a long-term hedge, renewed growth could occur.
Until then, markets may stay range-bound and reactive to macro headlines. It added that investors may consider staying vigilant about global developments, remain diversified, and be prepared to capitalise on any market dislocations that a trade war may create.