Bitcoin Struggles Amid Risk-Off Sentiment and Trade Uncertainty

Bitcoin experienced a decline on Tuesday, extending its overnight losses as broader market sentiment soured due to growing uncertainty surrounding U.S. trade tariffs and the fiscal implications of President Donald Trump’s tax and spending cut bill. The world’s largest cryptocurrency fell 1.5%, trading at $106,811.6 by 01:39 ET (05:39 GMT), after having significantly outpaced broader crypto markets in June.

While Bitcoin has seen a wave of institutional purchases from corporate holders such as Strategy, formerly MicroStrategy, and Metaplanet Inc., which collectively acquired more than $600 million worth of Bitcoin, these announcements have done little to bolster the digital asset. The profit-taking in Bitcoin and its failure to capitalize on institutional inflows highlight the ongoing uncertainty in the market. This is also reflected in Bitcoin’s recent underperformance compared to other risk-driven markets like equities, where Wall Street saw record highs, bolstered by gains in technology stocks.

U.S. Trade Tariffs and Tax Bill Dominate Sentiment

Bitcoin’s declines are largely tied to broader concerns over President Trump’s economic policies. Markets are now focused on two main uncertainties: the trade tariffs set to take effect if the U.S. doesn’t reach trade agreements with major global economies by July 9, and the passage of Trump’s “big beautiful bill,” a sweeping tax and spending cut proposal.

On the trade front, the U.S. and Canada have reportedly agreed to resume negotiations after Canada rescinded a digital sales tax on U.S. companies. However, relations with Japan have soured, with Trump criticizing the country for not purchasing U.S. rice and threatening to end trade negotiations. As countries face a July 9 deadline to reach trade deals with the U.S., failure to do so could result in tariffs ranging from 20% to 50%, exacerbating global trade tensions.

On the fiscal side, U.S. Senators are currently debating Trump’s tax-and-spending bill, which analysts warn could add $3.3 trillion to the country’s national debt over the next decade. With U.S. debt already at a record-high $36 trillion, concerns are mounting that the bill could worsen the fiscal deficit, heightening the risk of a government default, especially if the spending cap is not raised. These concerns are dampening market sentiment, contributing to a broader risk-off environment that is weighing on crypto prices.

Impact of Fiscal and Trade Concerns on Crypto Markets

While the trade and fiscal concerns don’t directly impact cryptocurrencies, their speculative nature makes them vulnerable to shifts in market sentiment. As fears over fiscal stability and trade disruptions grow, investor confidence in risk assets, including cryptocurrencies, has been shaken. This has been particularly evident in the broader crypto market, with many altcoins continuing to struggle.

Altcoins Struggle to Find Relief

Outside of Bitcoin, the broader cryptocurrency market has seen little relief after suffering significant losses in June. World no. 2 cryptocurrency, Ether, fell 0.2% to $2,459.01, while XRP posted a modest gain of 1.2% to $2.2169. Solana rose 0.5%, but Cardano remained flat after plummeting nearly 17% in June.

Among meme coins, Dogecoin fell 1.6%, while $TRUMP slid 3.2%. These weak performances highlight the ongoing uncertainty in the crypto market, with altcoins failing to regain any significant momentum after their sharp declines last month.

Crypto Market Faces Uncertainty Amid Broader Economic Concerns

The broader cryptocurrency market is facing ongoing challenges, driven by heightened risk aversion and uncertainty surrounding U.S. trade and fiscal policies. Bitcoin’s struggle to break out of its recent trading range is indicative of the broader sentiment in the market, while altcoins continue to underperform due to weak demand. As market participants await clarity on the potential impacts of U.S. trade tariffs and Trump’s tax-and-spending bill, the outlook for cryptocurrencies remains uncertain. If the fiscal and trade concerns persist, the market could face continued downward pressure, with Bitcoin and altcoins struggling to find strong support in the near term.