Bitcoin's price continues its volatile journey, influenced by President Trump's recent tariff declarations and broader market fluctuations. Since then, Bitcoin has crashed hard after hitting record highs — a reflection of the volatility that has gripped the U.S. stock market in recent weeks. Despite recent resilience at the start of 2023, the cryptocurrency is still in the high-risk assets category and vulnerable to sudden price fluctuations.
Bitcoin's Price Fluctuations
Just as Bitcoin’s value has experienced sudden extremes over the past several weeks, so have its advocates. The price of Bitcoin hit an all time high of $104,669 on January 25, a height that many would have thought impossible just a few months ago. The market’s euphoria quickly dried up as President Trump imposed large-scale tariffs, setting off a chain reaction that had major implications across nearly all asset classes.
The market-wide pullback was triggered by the announcement of a 10% base tariff on all imports to the United States. From last Friday to Monday, Bitcoin’s price dropped by 6.93%, closing slightly above $74,000. The first reaction was negative, but Bitcoin shot back up immediately. By the close of markets on Monday, it rocketed back up over $78,000.
On Wednesday, BTC jumped by 8.82%, but it did not last. As of Thursday afternoon on the East Coast, that volatility had continued, with the price of bitcoin down $4,600 – 8.74%. In Thursday after-hours trading, the price of one Bitcoin was down 3.43% to just over $79,700. Even with the recent correction, Bitcoin is still hovering close to the $80,000 figure that seemed an unattainable wish just a year ago.
Correlation with Traditional Markets
The dollar price of Bitcoin has been closely correlated with the upside-down performance of the overall U.S. stock market. This led to a major divergence between crypto prices and traditional markets last week. As experts point out, Bitcoin is often influenced by the performance of the big indices such as the S&P 500.
“Typically, when we see a strong market pullback in the traditional finance world, crypto usually mirrors that,” - Nick Selvaggio
“If we see the S&P dropping like crazy, bitcoin tends to drop like crazy, as well.” - Nick Selvaggio
This close correlation paints a rather concerning picture of the cryptocurrency market’s growing dependence on traditional financial systems. Bitcoin’s extremes tend to exaggerate those of the Nasdaq and S&P 500.
“Whatever the Nasdaq does, or the S&P does, it does a magnified version of that,” - Mitchell O. Goldberg
Ethereum's Performance
Though Bitcoin has taken the lion’s share of the attention, it has not been the only place to see big movement. Ethereum, the second-largest cryptocurrency by market capitalization, is enjoying a strong day - up nearly 14%. This performance is representative of the larger enthusiasm and money being poured into the crypto world.
Although this is all great news for Ethereum’s positive momentum, Bitcoin is still crypto’s king. Its history and evolution—from 2021’s insane bull run to today’s wrenching collapse—remain the touch points that influence the industry’s perception, mood and tenor going forward.
“it’s the riskiest asset class on the planet still.” - Nick Selvaggio
