Traders attribute the poor performance of Bitcoin to the US-led trade war, but there is more to the reality. Although tensions globally have weighed on markets, Bitcoin was underperforming before tariffs were levied.
Bitcoin has not been able to cross the $89,000 mark since March 7, 2025. Though all fingers are pointed towards the US-China trade war, facts tell us that BTC was already declining prior to the tariff war.
For instance, while the S&P 500 made historic highs in February, Bitcoin repeatedly failed to hold above $100,000 for months. This suggests that trade tensions cannot be the only reason for the disappointing performance of Bitcoin.
Excessive Expectations from Bitcoin Reserves and ETFs were Unmet
The majority of investors thought national Bitcoin reserve and spot Bitcoin ETFs would drive BTC higher.
- Bitcoin ETFs amassed $2.75 billion worth of net inflows after Jan. 21, reflecting high institutional demand.
- Trump’s promise of an American Bitcoin reserve excited traders, but when news broke on March 6, it failed to spark a price rally.
Despite all these positives, Bitcoin kept lagging behind.
Inflationary Forces and a Sluggish Economy Are Holding Back BTC
The development of Bitcoin has also been hampered by economic conditions:
- Inflation itself is now better contained, as US prices advanced only 2.5% in February while the Eurozone experienced a rise of 2.2% in March. This contrasts with earlier years since it means speculators are no longer flocking to Bitcoin as a hedge.
- Slower inflation makes interest rate cuts more probable, which in the past have had a higher propensity to lift equities and real estate over Bitcoins.
- The US labor market is weakening, which has traders getting nervous about risk assets like BTC.
While the trade war has played a role, Bitcoin’s bigger challenges come from economic shifts and changing investor behavior. Traders hoping for a quick boost from ETFs or government Bitcoin purchases may need to adjust their expectations—Bitcoin’s next big rally won’t come from tariffs alone.
