Bitcoin took a sharp hit overnight, sliding from the $87,000 zone to trade at $82,031 as of this morning. Ethereum followed suit, briefly dipping below $2,700 and currently hovering at $2,731. The rout came after President Trump declared a national emergency and announced actions against Iran and Cuba, stoking broad market fear. Gold, which had plunged from its record $5,500 to $5,100, recovered to $5,300 — yet crypto liquidity remained frozen, with no signs of capital rotating back into digital assets.
Geopolitical Shocks Collide with Dollar Credit Concerns
The selloff is fueled by a confluence of uncertainties. First, the U.S. government faces a shutdown risk, eroding dollar credit even as Trump calls for bipartisan cooperation to resolve the impasse. Some safe-haven flows that had piled into gold may now pivot back to Treasuries, draining crypto liquidity further. Second, after moves against Venezuela and Greenland, Trump escalated tensions by threatening tariffs and potential military action against Cuba and Iran — driving a wholesale flight from risk assets. Crypto, being the highest-beta play, bore the brunt.
Fed Chair Shakeup Looms Over Markets
Trump is set to announce a new Fed chair pick this week, having repeatedly threatened to oust current Chair Jerome Powell early. The battle for Fed independence is now fully engaged: whether Powell can stick to a data-dependent, no-rate-cut stance — or bend to Trumpism — will have massive implications for global asset prices. In the face of such policy uncertainty, crypto investors are choosing to stay on the sidelines, amplifying downward pressure.
The market finds itself in a curious state — gold is hoovering up capital while crypto bleeds. A reversal hinges on whether geopolitical tensions ease and the Fed leadership saga reaches a clear resolution.