As of the writing of this article, the cryptocurrency market has seen Bitcoin 
$111,531 drop below $86,000, influenced by statements from Trump, who is aggressively disrupting global trade balances. This trend raises the question: why are cryptocurrencies so willing to be the biggest losers in this trade war?
Cryptocurrency and the Trade War
The Kobeissi Letter delves into the reasons behind the decline in cryptocurrencies. The U.S. is aggressively discussing additional tariffs with trade partners such as the EU, China, Mexico, Canada, and the UK, with Trump remaining obstinate.
Since the trade war began on January 20, approximately $800 billion has been wiped from the crypto market. While Bitcoin has long been viewed as a hedge against uncertainty, the current situation defies this trend. Historically, expectations have been for Bitcoin to rise amidst inflation or crises, yet this has not materialized in recent times.
From 2015 to 2023, Bitcoin mirrored gold’s performance. However, recent months have indicated a shift in this correlation.
Trump and the Crypto Summit
Trump’s potential actions regarding cryptocurrencies have triggered a short-term peak in the markets. Within five weeks, the crypto market plummeted from a $3.7 trillion high to $2.8 trillion, coinciding with the end of SEC’s crypto cases.
The correlation of cryptocurrencies with risk assets has increased, as evidenced by Bitcoin aligning with NASDAQ100 trends. In 2024, this correlation coefficient reached an impressive 0.88.
However, this correlation has now deteriorated. Markets are pricing in decreasing liquidity, a factor learned since 2020, where diminished liquidity often leads to weakened crypto performance. An example of this was seen in the February 1 “flash crash,” where a sudden liquidity drop resulted in a staggering $760 billion loss.
Following the elections, cryptocurrencies attracted a wave of individual investors, with a net inflow of about $2 billion into ETFs around November 6-7. The influence of Trump Coin led to a substantial influx of retail investors into the markets.
While some fraud incidents on the Solana 
$184 network deterred certain investors, the broader picture indicates that new individual investors are more cautious and seek quick profits. This behavior reflects a shift from long-term holders to those who panic at minor declines, eager to exit at the first sign of trouble.
