Market uncertainty regarding US tariffs exacerbated the erosion of crypto investor confidence further after last week’s $1.5 billion Ethereum hack at the Bybit exchange, causing Bitcoin to slide below $90,000, reaching its lowest point since November 18 on Tuesday.

BTC fell over 7% to about $87,200, down over $20,000 from its peak of above $109,000 hit on Donald Trump’s inauguration day last week.

With the US economy showing signs of turning iffy, recession fears are back.

There is mounting evidence that Americans are becoming more anxious about their economic future due to uncertainties surrounding President Trump’s policies. Consumer confidence in the US plummeted last month by the most since August 2021.

Americans are reducing their outlays: More than half of consumers in a new Wells Fargo poll are putting off big life choices because they are worried about the economy and the fallout from Trump’s tariff threats.

One in six have delayed their aspirations for further education, one in eight have delayed their retirement, and around one-third have put off purchasing a property.

In an indication of recession worries, safe-haven Treasury prices surged substantially, bringing yields to two-month lows.

What added to those concerns was Trump’s reiteration to impose a 25% tariff on imports from Canada and Mexico ahead of Monday’s deadline after the delay in those levies last month.

Smaller cryptocurrencies have taken a far bigger beating than Bitcoin, which has dropped around 8% in the past week. According to CoinGecko, the value of Dogecoin, Solana, and Cardano tokens has decreased by approximately 20%.

There has been a broad decline in sentiment in the cryptocurrency market since the start of the year, the turbulence surrounding memecoins in the previous several weeks, and the latest Bybit hack, which has added to the sombre mood.

Coming off the heels of the largest hack in history, the latest decline in cryptocurrency prices is hardly shocking.

The macroeconomic scenario playing out also is weighing on crypto investments.

The bigger concern is a larger selloff within the crypto space due to a small but rather concerning trend in risk assets.

Wall Street wasn’t exactly a happy place, with the “Magnificent Seven” stocks falling into correction territory.

Tuesday was a turbulent time for American stocks, which had been churning around records for much of 2025. The seven giants that drove a 54% increase in US stocks over two years plunged into deep red territory.

With a 3.4% decrease on Tuesday, the Bloomberg Magnificent 7 Index has now fallen more than 10% from its record high set on December 17.

Over that time, the group’s aggregate market value has dropped by $1.6 trillion. Tesla was among the top companies that fell, with a 37% drop.

Despite declining stocks, we see the great decoupling of cryptos versus US stocks.

The correlation between Bitcoin and Nasdaq has seen a significant fall this year, and the current sentiment towards cryptos is negative.

“The crypto market is drowning in negativity, primarily due to a series of meme coin scandals and rug pulls,” said Martin Leinweber, director of digital asset research & strategy at MarketVector Indexes and author of “Mastering Crypto Assets.”

He added, “High-profile scams, like the Libra Coin debacle in Argentina, Trump Coin, and other meme tokens, have eroded investor confidence, leading to sharp declines in Solana and altcoins.”

Solana has been dubbed the “memecoin chain” even though it is still one of the most scalable, inexpensive, and quick blockchains. A lot of money has been moving out of Solana and into Ethereum and other networks because of all the FUD (fear, uncertainty, and doubt). But Solana’s core strength remains: it’s not merely a platform for meme coins; it also hosts DeFi, AI apps, RWAs, and next-gen financial tools.

At the same time, before Tuesday’s crash, Bitcoin’s price was in a small range below $100,000, leading many traders to sell their Bitcoin holdings, thinking that the crypto bull market had ended.

However, is this truly accurate?

Source: Total Return indexed to 100, MarketVector Indexes

The fact that the United States policy shifts for cryptos have fallen short of expectations contributes to the change in attitude and the Great Decoupling.

Leinweber says, “This breakdown in correlation between crypto and equities is unusual, especially considering the macro backdrop remains risk-on.”

With the dollar weakening, the director of MarketVector Indexes expects crypto and other risk assets to benefit from it as they have in the past.

He said, “Given this setup, it’s unlikely that crypto will stay this depressed for long. The capital that has been flowing into equities will, sooner or later, find its way back into digital assets.”

Crypto Capitulation: Signs of a Bottom?

Leinweber says more than 93% of the top 100 cryptocurrency tokens are trading below their 90-day moving average.

These severe circumstances typically occur before market bottoms rather than lasting for an extended period.

The market indicator that tracks social media activity, volatility, trends, and prices—the Crypto Fear and Greed Index—recently hit a five-month low of 25, reflecting increasing pessimism.

As Trump’s tariff policies remain unclear, cryptocurrency prices have been falling.

Still, some analysts are considering whether it is time to buy the dips.

In the long run, bitcoin could gain from lower US Treasury yields caused by a risk-off attitude after Friday’s PMI report, according to Standard Chartered global head of digital assets research Geoffrey Kendrick, who predicts a possible rebound in the medium term.

“But do not buy the dip yet; a move to the low $80,000s is on,” Kendrick added.

Bernstein analysts have reiterated their $200,000 bitcoin price forecast by year-end, and traders are monitoring forthcoming US inflation readings for indications of a possible bullish turnaround if the data trend toward the Federal Reserve’s objective.

However, Trump’s policies are starting to hurt crypto assets and wider risk markets.

The uncertainty of tariffs as a negotiation strategy or as a real threat has many investors on the run.

According to Michael Hartnett, a strategist at Bank of America, “Suspicion” is growing regarding the S&P 500’s direction due to increasing risks.

That comes even as the Wall Street benchmark is only 2.6% off last week’s all-time high.

In a Bloomberg Television interview today, Hartnett warned that the government might take action to stop the decline if the stock price drops another 6%.

However, Elon Musk’s Department of Government Efficiency is still actively seeking government positions and budget cuts in Washington.

Investors are attempting to quantify the purge’s impact on the Federal Reserve’s interest-rate trajectory, and market pessimism is evident.

If DOGE were to implement $100 billion in cutbacks, according to Bloomberg Economics’ Anna Wong, it would be sufficient to reduce the consumer price index by 0.2 percentage points.

A more drastic reduction of $600 billion would be equivalent to 0.8 percentage points.

According to her, the Federal Reserve will have to cut more if either happens.

“Pricing rate cuts in 2026 = underestimating Elon,” remarks Anna.

After Trump’s latest broadside on tariffs and Beijing, concerns about stricter chip restrictions on China have made semiconductor stock prices tumble.

There has been a 1.5% drop at Intel and Nvidia and a 2% drop at ASML and ASMI in Europe. The Tokyo Electron of Japan fell 4.9%.

Stocks linked to cryptocurrencies are falling as the price of Bitcoin fell below $90,000, its lowest level since mid-November.

This reversed some of the gains made since Trump’s re-election. Microstrategy lost over 6%, and Coinbase was down over 5%.

Treasury Yield Scorecard

The stock market was the most important metric for the real estate tycoon-turned-president during his first time in office.

However, a new indicator has emerged on the White House’s radar: the yield on 10-year Treasury notes as the second month of Trump’s second term progresses.

Musk and Treasury Secretary Scott Bessent mentioned lowering market borrowing costs as a goal, which market watchers may remember during Bill Clinton’s presidency.

They should be concerned about the Treasury market. The 10-year yield mainly determines the cost of borrowing money for both homebuyers and the largest US firms.

It is unclear how well the markets are responding to Bessent’s proposal to lower the deficit and Musk’s attack on the government bureaucracy.

Investors aren’t completely writing out the possibility of success just yet.

US Treasuries have been doing better than interest-rate swaps of a similar maturity during the past few weeks.

However, the majority of creditors are looking for observable, tangible outcomes.

For now, the risk-off trend is playing in a loop, with broader macro dynamics also showing signs of strain.

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