Bitcoin Faces 11% Loss for Q1, Amid Tariff Concerns and Risk-Off Sentiment
The first quarter of 2025 closed with a rocky performance for bitcoin (BTC), ending with an 11% loss, while the S&P 500 recorded its biggest drop since Q2 2022. As U.S. tariffs are set to kick in on April 2, traders are bracing for potential market impacts.
On Tuesday, Bitcoin was nearing $85,000 during European trading hours, as investors anxiously await the effect of tariffs scheduled for Wednesday. Meanwhile, Dogecoin (DOGE) and Cardano (ADA) surged by over 7%, leading modest gains among the major cryptocurrencies. Ethereum (ETH), XRP, Solana’s SOL, and BNB Chain’s BNB also saw upticks of nearly 5%.
Despite these movements, the overall cryptocurrency market capitalization shrank by 3%, according to CoinGecko data, while the CoinDesk 20 index saw a 3% increase over the past 24 hours. This activity comes amid a broader risk-off sentiment gripping global markets, with U.S. equities faltering — the S&P 500 dropped 3% last week, marking its worst performance since September 2023. Simultaneously, gold surged to fresh highs, drawing investors seeking safe havens.
The looming tariffs, along with a slew of U.S. economic and labor reports from the past month, have cast a shadow over crypto market sentiment. Augustine Fan, head of insights at SignalPlus, highlighted a lack of fresh market catalysts, such as major ETF inflows, and noted that the market remains in a low-conviction state as it closed a volatile quarter. Fan attributed this lack of momentum to the 11% loss suffered by bitcoin and the significant decline in the S&P 500.
Futures data reveals that speculative positions on bitcoin, tracked by the CME, have shifted toward bearish sentiment — a stark contrast to the bullish fever seen in January, according to Fan. While positioning data does not necessarily predict a tradeable setup, Fan warned that the catalysts for a sustained rally remain elusive, although any reversal could be sharp due to the substantial short positions.
On a more positive note, long-term holders of bitcoin appear resilient. Glassnode data indicates that holders with 3-6 month positions are realizing growing profits and are trading at their lowest levels since June 2021. This suggests that these investors are committed to their positions rather than engaging in panic selling.
Additionally, newer whale investors — large players who have accumulated bitcoin recently — are holding onto their assets, providing stability to bitcoin’s price floor, Glassnode reports.
Jupiter Zheng, a partner at HashKey Capital’s Liquid Fund and Research, emphasized that while the tariffs and economic data present short-term headwinds, there is a long-term optimism for the crypto market. Zheng noted that despite the “risk-off” sentiment, more institutions are integrating crypto, and regulators worldwide are introducing new policies aimed at enhancing adoption.
In conclusion, while the market faces immediate risks from economic uncertainties and upcoming tariffs, there is still confidence in the long-term prospects of the cryptocurrency space as institutional adoption continues to grow.
