Bitcoin BTC/USD continues its downward spiral, prompting a debate among market commentators to what extent macroeconomic data is influencing the correction.
What Happened: In an X post on Thursday, global capital markets commentator The Kobeissi Letter said the trade war is back as President Trump threatened a potential 25% tariff on the European Union.
This caused the S&P 500 to shed $500 billion in market cap and Bitcoin to follow suit, briefly dipping below $84,000. At the time of writing, the apex crypto is down 3%, trading around $85,500.
The Kobeissi Letter notes that inflation expectations have surged from 2.7% to 4.3% and warns tariffs could add $3,000 to car prices and raise food costs due to reliance on Mexican imports.
The commentator highlighted that while gold was up 10% Bitcoin dropped 10%, diverging from its typical role as a hedge.
They believe that with Bitcoin in a bear market and the S&P down 4%, continued market turbulence into the next quarter is on the table.
The Volatility Index (VIX) is rising, up 30% in the past two weeks, leading the commentator to conclude that "volatility is here to stay."
Why It Matters: In another tweet, Kobeissi Letter highlighted that crypto markets have erased $800 billion in valuation since trade war concerns began on Jan 20.
While Bitcoin was viewed as a decentralized hedge against uncertainty, its correlation with risky assets has grown rapidly.
This is evidenced in Bitcoin ETF outflows, which have reached record levels over the past week.
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