Binance Research reports that the crypto market has lost 1 trillion USD in value due to escalating global economic instability caused by the US trade war.
The cryptocurrency exchange Binance published a research report on April 7, analyzing the impact of escalating tariff measures from the US government and the disruptive effects on global markets, especially the digital asset market.
Since President Donald Trump returned to power in January, his administration has implemented a series of large-scale trade protection measures. The latest tariff announcement - released on April 2 called "Liberation Day" - marked a significant escalation in global trade tensions, leading to retaliatory moves from major trading partners.
The report indicates that these developments have caused economic instability similar to the post-Smoot-Hawley Tariff Act of 1930, when the average US import tariff soared to nearly 19%, compared to 2.5% in 2024.
Risk-Off Sentiment Dominates the Crypto Market
According to Binance Research, these policy fluctuations have shaken investor confidence and led to a sharp decline in crypto valuation:
"Market sentiment has shifted to an extremely cautious state, with investors responding to tax announcements in a classic 'risk-off' behavior."
"The total crypto market capitalization has decreased by approximately 25.9% from its January peak - equivalent to about 1 trillion USD in evaporated value - demonstrating the high sensitivity of this market to macroeconomic instability."
The correction has affected a wide range - from bitcoin and ethereum to altcoins, with speculative tokens like memecoins losing more than half their value. Many investors have shifted to traditional defensive assets like gold, which has currently reached a historic high.
Binance notes: "As the crypto market increasingly behaves like risk assets, a prolonged trade war could continue to weaken capital flow and reduce demand for digital assets in the short term. As a result, capital that would have flowed into crypto is now staying on the sidelines or moving to safe havens like gold."
Looking ahead, Binance warns that persistent geopolitical and economic instability could continue to overshadow crypto's long-term value prospects:
"This is the most aggressive tariff implementation since the 1930s, and its impacts are spreading across both the macroeconomic economy and the crypto market. In the short term, crypto may continue to maintain high volatility, as market sentiment continues to fluctuate with each new development in the trade war."
However, the report also leaves open a potential recovery scenario if fundamental conditions improve:
"If macroeconomic conditions stabilize, new narratives emerge, or if crypto can reaffirm its role as a long-term hedge - the market may enter a new growth cycle. But until then, the market will likely continue to move sideways and remain sensitive to macroeconomic headlines."
