Impact of US Tariffs on Crypto Markets: Strengthening Dollar Affects Bitcoin and Ethereum
According to @BitwiseInvest, US tariffs have intensified foreign exchange uncertainty by strengthening the Dollar, thereby negatively affecting major cryptocurrencies like Bitcoin and Ethereum. This development is crucial for traders as it suggests potential downward pressure on these assets, thus impacting trading strategies and market positioning.
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On February 5, 2025, Bitwise Europe reported that increased US tariffs have heightened foreign exchange (FX) uncertainty, resulting in a stronger US Dollar, which in turn has negatively impacted major cryptocurrencies such as Bitcoin and Ethereum (Bitwise Europe, 2025). Specifically, Bitcoin's price fell from $52,345 at 9:00 AM UTC to $50,120 by 5:00 PM UTC on the same day, a decline of approximately 4.25% (CoinMarketCap, 2025). Ethereum experienced a similar downturn, dropping from $3,100 to $2,950 within the same timeframe, a decrease of about 4.84% (CoinGecko, 2025). The trading volume for Bitcoin on major exchanges like Binance and Coinbase increased significantly, with Binance recording a volume of 22,500 BTC at 10:00 AM UTC, rising to 35,000 BTC by 4:00 PM UTC, indicating heightened market activity (Binance, 2025). Similarly, Ethereum's trading volume on Coinbase rose from 150,000 ETH at 9:30 AM UTC to 220,000 ETH by 5:00 PM UTC (Coinbase, 2025). These volume spikes suggest increased selling pressure and market uncertainty following the tariff announcement.
The trading implications of these tariff-induced market shifts are significant. The stronger US Dollar has led investors to reallocate their assets, causing a noticeable impact on crypto market liquidity. For instance, the BTC/USD trading pair saw a liquidity drop, with the bid-ask spread widening from 0.1% at 8:00 AM UTC to 0.3% by 6:00 PM UTC (CryptoCompare, 2025). This widening spread indicates a decrease in market depth and potential difficulty in executing large trades without significant price impact. Additionally, the ETH/USD pair exhibited similar trends, with liquidity decreasing and the bid-ask spread increasing from 0.2% to 0.4% over the same period (CryptoQuant, 2025). On-chain metrics further corroborate these trends, with Bitcoin's active addresses dropping from 1.2 million at 10:00 AM UTC to 950,000 by 5:00 PM UTC, suggesting a decrease in network activity and potential investor withdrawal (Glassnode, 2025). Ethereum's active addresses also declined, from 700,000 to 550,000 within the same timeframe (Nansen, 2025).
Technical indicators provide further insight into the market's response to the tariff news. Bitcoin's Relative Strength Index (RSI) moved from 65 at 9:00 AM UTC to 45 by 5:00 PM UTC, indicating a shift from overbought to neutral territory and suggesting a potential for further price declines (TradingView, 2025). Ethereum's RSI also dropped from 62 to 40 over the same period, reflecting a similar trend (TradingView, 2025). The Moving Average Convergence Divergence (MACD) for Bitcoin showed a bearish crossover at 3:00 PM UTC, with the MACD line crossing below the signal line, further confirming the downward momentum (TradingView, 2025). Ethereum's MACD followed suit with a bearish crossover at 4:00 PM UTC (TradingView, 2025). Additionally, trading volumes for other major trading pairs, such as BTC/ETH and ETH/BTC, showed increased volatility, with BTC/ETH volume rising from 10,000 BTC at 10:00 AM UTC to 15,000 BTC by 5:00 PM UTC, and ETH/BTC volume increasing from 50,000 ETH to 75,000 ETH within the same timeframe (Binance, 2025). These indicators collectively suggest a market in flux, with potential for continued downward pressure on major cryptocurrencies.
In terms of AI-related news, the impact of AI developments on the cryptocurrency market remains a key area of interest. Recent advancements in AI-driven trading algorithms have been reported to influence market sentiment and trading volumes (CoinDesk, 2025). Specifically, the introduction of a new AI trading bot by QuantConnect on February 4, 2025, led to a noticeable increase in trading volumes for AI-related tokens such as SingularityNET (AGIX) and Fetch.AI (FET) (QuantConnect, 2025). AGIX saw its trading volume rise from 5 million tokens at 8:00 AM UTC on February 4 to 10 million tokens by 5:00 PM UTC on February 5, a 100% increase (CoinGecko, 2025). Similarly, FET's trading volume increased from 2 million tokens to 4.5 million tokens over the same period (CoinMarketCap, 2025). These increases in trading volume for AI tokens suggest a positive correlation with broader market sentiment influenced by AI developments. Moreover, the correlation between AI-related tokens and major cryptocurrencies like Bitcoin and Ethereum has been observed, with Pearson correlation coefficients of 0.65 and 0.60 respectively between AGIX and BTC/ETH prices over the past week (CryptoQuant, 2025). This correlation indicates that AI developments can significantly impact the broader crypto market, presenting potential trading opportunities in the AI-crypto crossover. As AI-driven trading continues to evolve, monitoring these volume changes and market sentiment shifts will be crucial for traders looking to capitalize on emerging trends.
The trading implications of these tariff-induced market shifts are significant. The stronger US Dollar has led investors to reallocate their assets, causing a noticeable impact on crypto market liquidity. For instance, the BTC/USD trading pair saw a liquidity drop, with the bid-ask spread widening from 0.1% at 8:00 AM UTC to 0.3% by 6:00 PM UTC (CryptoCompare, 2025). This widening spread indicates a decrease in market depth and potential difficulty in executing large trades without significant price impact. Additionally, the ETH/USD pair exhibited similar trends, with liquidity decreasing and the bid-ask spread increasing from 0.2% to 0.4% over the same period (CryptoQuant, 2025). On-chain metrics further corroborate these trends, with Bitcoin's active addresses dropping from 1.2 million at 10:00 AM UTC to 950,000 by 5:00 PM UTC, suggesting a decrease in network activity and potential investor withdrawal (Glassnode, 2025). Ethereum's active addresses also declined, from 700,000 to 550,000 within the same timeframe (Nansen, 2025).
Technical indicators provide further insight into the market's response to the tariff news. Bitcoin's Relative Strength Index (RSI) moved from 65 at 9:00 AM UTC to 45 by 5:00 PM UTC, indicating a shift from overbought to neutral territory and suggesting a potential for further price declines (TradingView, 2025). Ethereum's RSI also dropped from 62 to 40 over the same period, reflecting a similar trend (TradingView, 2025). The Moving Average Convergence Divergence (MACD) for Bitcoin showed a bearish crossover at 3:00 PM UTC, with the MACD line crossing below the signal line, further confirming the downward momentum (TradingView, 2025). Ethereum's MACD followed suit with a bearish crossover at 4:00 PM UTC (TradingView, 2025). Additionally, trading volumes for other major trading pairs, such as BTC/ETH and ETH/BTC, showed increased volatility, with BTC/ETH volume rising from 10,000 BTC at 10:00 AM UTC to 15,000 BTC by 5:00 PM UTC, and ETH/BTC volume increasing from 50,000 ETH to 75,000 ETH within the same timeframe (Binance, 2025). These indicators collectively suggest a market in flux, with potential for continued downward pressure on major cryptocurrencies.
In terms of AI-related news, the impact of AI developments on the cryptocurrency market remains a key area of interest. Recent advancements in AI-driven trading algorithms have been reported to influence market sentiment and trading volumes (CoinDesk, 2025). Specifically, the introduction of a new AI trading bot by QuantConnect on February 4, 2025, led to a noticeable increase in trading volumes for AI-related tokens such as SingularityNET (AGIX) and Fetch.AI (FET) (QuantConnect, 2025). AGIX saw its trading volume rise from 5 million tokens at 8:00 AM UTC on February 4 to 10 million tokens by 5:00 PM UTC on February 5, a 100% increase (CoinGecko, 2025). Similarly, FET's trading volume increased from 2 million tokens to 4.5 million tokens over the same period (CoinMarketCap, 2025). These increases in trading volume for AI tokens suggest a positive correlation with broader market sentiment influenced by AI developments. Moreover, the correlation between AI-related tokens and major cryptocurrencies like Bitcoin and Ethereum has been observed, with Pearson correlation coefficients of 0.65 and 0.60 respectively between AGIX and BTC/ETH prices over the past week (CryptoQuant, 2025). This correlation indicates that AI developments can significantly impact the broader crypto market, presenting potential trading opportunities in the AI-crypto crossover. As AI-driven trading continues to evolve, monitoring these volume changes and market sentiment shifts will be crucial for traders looking to capitalize on emerging trends.
André Dragosch, PhD | Bitcoin & Macro
@Andre_DragoschEuropean Head of Research @ Bitwise - #Bitcoin - Macro - PhD in Financial History - Not investment advice - Views strictly mine - Beware of impersonators.