Bitcoin Struggles Through Volatile Quarter as Tariffs Loom; Long-Term Optimism Still Intact
Bitcoin has ended a turbulent first quarter of 2025 with a notable 11% decline, marking its worst quarterly performance since Q2 of 2022. The drop in price comes as traders eye the impending U.S. tariffs set to take effect on April 2, adding to the uncertainty and risk-off sentiment pervading the markets.
On Tuesday, during European trading hours, Bitcoin (BTC) was hovering near $85,000 as the market prepared for the potential fallout from the tariffs. Meanwhile, other major cryptocurrencies saw some gains, with Dogecoin (DOGE) and Cardano (ADA) leading the pack with rises of over 7%, while Ethereum (ETH), XRP, Solana (SOL), and BNB Chain’s BNB increased by around 5%.
Despite these gains in certain altcoins, the overall cryptocurrency market capitalization experienced a 3% drop. CoinGecko data revealed that the broader market showed some resilience, with the CoinDesk 20 index gaining 3% over the past 24 hours. However, the market’s shift to risk-off sentiment also triggered a surge in gold prices, a traditional safe haven asset, which reached new highs on Tuesday.
With U.S. tariffs looming and a string of underwhelming U.S. economic and labor reports over the past month, the mood in the crypto market has remained downbeat. Augustine Fan, head of insights at SignalPlus, highlighted a lack of significant market catalysts, such as major ETF inflows, that would otherwise drive bullish sentiment. As the quarter closed, Bitcoin had dropped 11%, a reflection of broader market weakness, with the S&P 500 also facing a steep 3% drop, its worst since late 2023.
Futures data from the CME showed that speculative positions on Bitcoin were the most bearish in recent years, a stark contrast to the bullish fervor that defined the market earlier this year. Fan noted that while the positioning data is indicative of current market sentiment, it does not provide direct trading signals. However, he suggested that if a bullish reversal occurs, it could be sharp given the significant short positioning.
In contrast to this bearish outlook, long-term holders of Bitcoin remain resilient. According to data from Glassnode, Bitcoin holders with positions lasting 3-6 months are seeing growing profits, even as the price remains relatively low compared to previous highs. This shows that long-term investors are confident and not panicking, which could provide a strong price floor for Bitcoin.
Jupiter Zheng, a partner at HashKey Capital’s Liquid Fund and Research, echoed similar sentiments, explaining that the current market slump is driven primarily by short-term risk-off sentiment. However, he remains optimistic about Bitcoin’s long-term prospects, citing the continued institutional integration of cryptocurrency and the development of regulatory frameworks worldwide that are likely to support wider adoption.
In conclusion, while Bitcoin faces challenges in the short term due to the impending tariffs and the broader economic uncertainty, the long-term outlook remains optimistic. The growing presence of institutional investors, the resilience of long-term holders, and the ongoing positive regulatory developments provide a solid foundation for Bitcoin’s future potential.
