Crypto Crash Deepens as China Tariffs and ETF Outflows Shake Market Confidence

Crypto markets dip amid U.S.-China tariff tensions, spot Bitcoin ETF outflows, and rising investor fear. Experts weigh recovery prospects as global trade talks continue.

The cryptocurrency market continues to face turbulence as geopolitical and economic forces weigh heavily on investor sentiment. According to data from CoinMarketCap, the global crypto market capitalization has slipped to $2.68 trillion, down 0.58% in the past 24 hours. Trading volume has also fallen slightly to $90.91 billion, signaling lowered participation. Bitcoin’s dominance has dipped by 0.21%, currently standing at 61.91%, reinforcing concerns of weakening momentum.

Bitcoin, which recently hit an all-time high of $84,000, has now retraced to $83,608.44. While the correction appears modest, broader market indicators suggest deeper instability—and several key developments help explain today’s downturn.

Main Reasons Behind the Crypto Crash

1. China Imposes 34% Tariff on U.S. Goods

In a move that has sent shockwaves through the global economy, China has imposed a 34% tariff on key U.S. imports, including technology products that could affect blockchain infrastructure. The announcement, published on the Ministry of Finance website, exacerbated fears across both traditional and crypto markets. U.S. equities, including the Nasdaq, plunged to 11-month lows following the news.

Cryptocurrencies have historically mirrored the performance of legacy markets, and this correlation has led many investors to exit their positions, fearing a cascading impact. The result is reduced confidence and liquidity in the crypto space.

2. Spot Bitcoin ETF Outflows

Investor concern was further amplified by notable outflows from spot Bitcoin ETFs. On April 4, ETFs recorded a net outflow of $64.88 million, a worrying sign despite the total cumulative inflow still sitting at $36.07 billion. These outflows suggest that institutional confidence is fading, and with it, the market’s stability.

ETF outflows often indicate risk-off sentiment among major financial players, and when large stakeholders begin retreating, smaller investors tend to follow suit.

3. Fear & Greed Index Remains in “Fear” Territory

The current Fear & Greed Index stands at 30, firmly within the “Fear” zone. Historically, this sentiment metric has been a strong psychological marker for investor behavior. When fear dominates the market, widespread sell-offs typically follow, pushing asset prices further into the red.

With sentiment still low, recovery momentum appears stalled—for now.

Will Crypto Recover? What Experts Say

Powell’s Warning and Rate Pause

Federal Reserve Chair Jerome Powell added to market uncertainty during his April 4 speech. Addressing concerns over the Trump administration’s new tariffs, Powell warned of potential inflationary effects and slowed economic growth. Consequently, the Fed has paused any immediate interest rate adjustments, creating further ambiguity for markets.

This indecision has translated into additional caution across crypto platforms, with investors hesitant to re-enter until clearer policy signals emerge.

Global Reactions Offer a Glimmer of Hope

Despite current headwinds, optimism remains in some quarters. Countries like Argentina and the UK are actively engaging in discussions with the U.S. to reduce or eliminate the newly announced tariffs. Canada and Vietnam have also joined the diplomatic efforts.

Should these negotiations bear fruit, market confidence could see a sharp rebound. A resolution may be the catalyst needed to reinvigorate a bullish sentiment across crypto assets and potentially restart upward momentum.

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