Why Is Crypto Market Down: Impact of Trump 100% Tariff on Movies?

Washington D.C. – May 6, 2025 – The global cryptocurrency market is facing renewed pressure as geopolitical developments and large-scale trading activity combine to rattle investor confidence. While the overall decline in market capitalization remains modest, the growing uncertainty has triggered sharp reactions, particularly in Bitcoin and other major digital assets.

According to data from CoinMarketCap, the total market capitalization of cryptocurrencies currently stands at approximately $2.95 trillion, reflecting a 0.48% decline over the past 24 hours. At the same time, total trading volume has surged by 11.44%, reaching $56.4 billion. Analysts interpret this increase in volume amid a falling market cap as a sign of heightened volatility and shifting investor behavior.

In the decentralized finance (DeFi) sector, the daily trading volume reached $3.96 billion, accounting for about 7.03% of the broader crypto volume. Meanwhile, stablecoins—which are often seen as a safer store of value in times of market turbulence—have made up the lion’s share of daily trades, with $51.74 billion in volume, representing nearly 91.75%.

Source: X

Trump’s Surprise Tariff Decision Sends Ripples Through Global Markets

A surprising and unconventional move by former President Donald Trump has emerged as one of the drivers behind the current unease in financial markets, including crypto. In a post made on Truth Social, Trump announced a 100% tariff on all foreign-produced movies, citing the need to protect the U.S. film industry from international competition. While the announcement primarily targets the entertainment sector, its broader implications have not gone unnoticed.

Global markets reacted swiftly to the announcement. Analysts believe the move represents a shift toward more aggressive protectionist policies, raising fears of a new wave of trade tensions. “Markets hate uncertainty,” said John Keller, a senior economic analyst at MarketWatch. “And when a high-profile political figure suggests sweeping tariffs, even in sectors seemingly unrelated to finance, it can rattle confidence across asset classes—including crypto.”

Risk assets like cryptocurrencies are typically among the first to respond to global shocks, as investors reassess exposure to volatile markets. As a result, Bitcoin has seen a pullback below key technical levels, contributing to broader negative sentiment across the digital asset ecosystem.

Bitcoin Slips Below Key Support Amid Whale Activity

Bitcoin (BTC), the world’s most valuable cryptocurrency, is currently trading at $94,394.17, marking a 1.10% decline in the last 24 hours. The drop below the psychological threshold of $95,000 has drawn attention from market watchers, many of whom view this level as critical support.

Source: X

One factor contributing to the recent selloff is activity from so-called “whales”—large holders of cryptocurrency capable of influencing price action with a single transaction. According to blockchain analytics platform Lookonchain, a whale withdrew 500 BTC—worth approximately $47.82 million—from the Binance exchange just 12 hours ago. Such large-scale movements can create instability and stoke fears of further selling pressure.

Crypto analyst Ali Martinez noted on X (formerly Twitter) that if Bitcoin fails to maintain the $95,000 support line, it could fall further toward the $92,000 level in the near term. “We are watching a critical moment,” Martinez said. “A sustained break below support could trigger panic among retail investors.”

Investor Sentiment Wavers: Fear and Greed Index Shifts to Neutral

Another indicator that reflects the market's shifting mood is the Fear and Greed Index, which dropped from 64 (Greed) to 52 (Neutral) over the past 24 hours. A month ago, the same index stood at 30, in the Fear zone. Historically, extreme fear has been viewed by some as a buying opportunity, while high greed levels often indicate that a correction may be near.

This quick change in sentiment suggests that investors are becoming more cautious amid geopolitical uncertainties and market volatility. “This doesn’t necessarily mean a crash is imminent,” said Michelle Harper, a crypto strategist based in New York. “But it does highlight that traders are entering a wait-and-see mode, closely watching global and domestic cues before making big moves.”

What Could Trigger a Recovery?

Despite the current downturn, market analysts point to several factors that could pave the way for a rebound in the near future.

One of the most closely watched events this week is the upcoming Federal Open Market Committee (FOMC) meeting in May 2025. The Federal Reserve is widely expected to keep interest rates steady in the range of 4.25% to 4.5%. However, all eyes will be on Fed Chair Jerome Powell, whose comments on inflation, economic outlook, and monetary policy may influence the broader markets.

“If Powell adopts a dovish tone and hints at rate cuts later this year, we could see renewed investor appetite for risk assets, including cryptocurrencies,” said Emily Xu, head of macro research at CryptoMacroLab. “Conversely, any hawkish messaging could bolster the U.S. dollar and weigh further on Bitcoin.”

Signs of Strength Beneath the Surface

While prices have dipped, inflow data tells a different story. According to Ali Martinez, nearly $19 billion has entered the crypto market over the last 30 days, suggesting that long-term confidence remains intact. Of that, approximately $12.58 billion went into Bitcoin and Ethereum, while $6.19 billion flowed into stablecoins.

“Despite all the noise, we’re still seeing significant capital moving into the space,” Martinez noted. “This speaks volumes about the resilience of digital assets in the face of macroeconomic headwinds.”

Source: X

Additionally, institutional interest appears to be growing. Several major asset managers have recently filed for or expanded Bitcoin ETF offerings, while trading volumes on regulated exchanges like the CME Group remain elevated. These developments suggest that sophisticated investors are positioning themselves for long-term exposure, even as short-term volatility continues.

Conclusion: A Temporary Setback or Warning Sign?

The cryptocurrency market is currently navigating a complex mix of global political developments, macroeconomic uncertainty, and technical challenges. The Trump tariff announcement, while seemingly unrelated to finance, has added a layer of unpredictability that markets generally dislike. At the same time, large-scale Bitcoin movements and shifting investor sentiment are exacerbating volatility.

Nevertheless, strong capital inflows and the potential for dovish signals from the Federal Reserve offer hope that the market could stabilize—and possibly rebound—if external conditions align favorably.

For now, caution dominates, but the long-term fundamentals of the crypto space remain robust. As investors await clearer direction from economic policymakers and the resolution of geopolitical tensions, market participants are advised to stay informed and focus on the bigger picture.

Writer @Erlin

Erlin is an experienced crypto writer who loves to explore the intersection of blockchain technology and financial markets. She regularly provides insights into the latest trends and innovations in the digital currency space.

 

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