What Happened?
Due to President Trump’s announcement of increased tariffs, global markets experienced a sell-off, leading to a collective decline of over $4 billion in the total amount of Bitcoin held by companies, indicating the sensitivity of the Bitcoin market to macroeconomic events.
Analysts believe that Bitcoin is on the verge of experiencing the largest price correction in this bull market phase. According to an analysis by the research director at CryptoQuant, the current decline of Bitcoin from its historical peak has the potential to become the largest one in this bull market cycle.
Market corrections are not necessarily negative; they may represent a healthy adjustment after a deep cleaning, preparing for larger price increases. However, they could also signal a depletion of market forces, weakening trends, or even potential reversals. Future market developments will require close observation.
Corporate Holdings of Bitcoin Decline
Following President Trump’s announcement of increased tariffs on April 2, a global market sell-off resulted in a recent collective reduction of over $4 billion in corporate Bitcoin holdings.
Data from BitcoinTreasuries.net shows that corporate Bitcoin holdings dropped from nearly $59 billion on April 2 to approximately $54.5 billion on April 7. This downward trend closely aligns with the timing of Trump’s tariff announcement, highlighting the Bitcoin market’s sensitivity to changes in macroeconomic policy.
The tariff policy not only directly impacted overall market sentiment but also negatively affected the stock prices of publicly traded companies holding significant amounts of Bitcoin. For instance, an ETF that tracks various corporate Bitcoin holders (Bitwise Bitcoin Standard Corporations ETF) has fallen over 13% since the tariff announcement. Similarly, the stock prices of a strategy firm known for substantial Bitcoin investments have also declined by more than 13% since April 2.
The recent drop in Bitcoin prices has placed Michael Saylor’s strategy on the defensive, as the company made no Bitcoin purchases during the decline from March 31 to April 6.
Furthermore, data from Strategytracker indicates that the company has spent $35.65 billion on its Bitcoin holdings, currently yielding a five-year return of only 17%.
The decline in stock prices reflects market concerns regarding Bitcoin as a corporate asset, particularly amidst high volatility and an uncertain regulatory environment. This contrasts sharply with traditional companies’ preference for holding low-risk assets such as U.S. Treasury bonds.
The impact of the tariff policy undoubtedly casts a shadow over the strategy of incorporating Bitcoin onto corporate balance sheets and may prompt companies to reassess the risks and returns associated with their cryptocurrency investments.
What’s Next for the Crypto Market?
Trump and his administration’s tariff escalation policies have undoubtedly introduced new variables into international trade and financial markets. In light of this policy, which could trigger widespread economic repercussions, investors and observers in the cryptocurrency market are compelled to ponder: how will crypto assets react in the shadow of potentially heightened trade barriers?
According to an analysis by CryptoQuant’s research director Julio Moreno, Bitcoin has currently declined by 26.62% from its historical peak of $109,500, which could mark the largest correction in this bull market cycle.
Market Correction: Sometimes referred to as a market adjustment, it denotes a significant decline in the price of the stock market, a specific index (e.g., Taiwan Weighted Index, U.S. S&P 500 Index), or other assets (such as cryptocurrencies) from recently established highs.
Although the recent drop in Bitcoin prices has caused considerable panic among investors, the crypto market has previously experienced several corrections. For example, Bitcoin saw an 83% drop in 2018 and a 73% correction in 2022, both far exceeding the current 26.62% decline.
What Does a Market Correction Indicate?
In fact, market corrections are not necessarily a bad thing, as larger corrections can effectively cleanse excessive leverage and short-term speculators, resulting in a healthier market structure and laying a more solid foundation for the next phase of stable growth. After experiencing the largest correction, if the market can stabilize, subsequent rebounds may be more powerful.
Additionally, Bitcoin has often witnessed corrections of 30%-40% or even deeper during previous bull market cycles. If this correction holds key technical or psychological support levels and remains within the historical range of bull market corrections, it may merely represent a severe but still “normal range” shakeout, not signaling the end of the bull market trend.
For long-term investors with a favorable outlook on Bitcoin, the largest correction in the cycle, if considered temporary, could present an excellent opportunity for purchasing or increasing positions.
However, market corrections can also serve as warning signals. If the correction reaches a new high for this cycle, it may indicate a depletion of buying power or overall upward momentum compared to previous corrections, potentially requiring longer recovery times or limited future upward space.
Moreover, this deep correction may reflect broader macroeconomic concerns (e.g., tariff escalations, persistent inflation pressures, uncertainty in central bank monetary policies, recession risks, geopolitical tensions, etc.), ultimately exerting substantial impacts on Bitcoin as a risk asset.
If the depth or duration of the correction significantly exceeds the typical range of historical bull market cycles, market participants may begin to question the current phase of the cycle or whether the structure and driving factors of this cycle differ fundamentally from past cycles, leading to investor anxiety and panic.
Regardless, the current cryptocurrency market has reached a critical observation point and potential turning point. It may represent a healthy adjustment after a deep cleansing in preparation for larger price increases, or it could signal a depletion of market forces, weakening trends, or even reversals. Close attention to subsequent price behavior, market structure, and macro background will be essential in determining its ultimate significance.
Reference: cointelegraph, cointelegraph