US Recession Odds Surge: How Could Donald Trump’s Tariffs Impact Bitcoin And The Crypto Market?

Several major investment banks raised their recession risk forecasts last week, reflecting growing concerns about the global economic outlook. J.P. Morgan now places the likelihood of a U.S. and global recession at 60%, while Goldman Sachs recently increased its U.S. recession probability to 45% over the next 12 months—up from 35% earlier this month, and a significant jump from 20% just last month. Goldman cited weakening economic fundamentals compared to previous years. The upward revisions come amid escalating fears of a trade war following sweeping tariffs announced by U.S. President Donald Trump.

The cryptocurrency market has not been immune to the broader economic turbulence. Since President Trump unveiled his global tariff measures last week, Bitcoin has dropped nearly 10%, falling below $78,000 as of Sunday night. The sharp decline underscores the fact that cryptocurrencies—despite being championed by the president—are still susceptible to broader market volatility, much like other high-risk assets.

Earlier in January, Bitcoin had reached an all-time high of nearly $110,000 on the day that Mr. Trump was inaugurated. However, the latest downturn highlights investor unease, as financial markets brace for further instability. U.S. equities also suffered their worst weekly performance since 2020, exacerbated by concerns over the economic impact of the administration’s aggressive tariff strategy.

Bitcoin’s slump is a stark reminder that even digital assets with strong narratives are not immune to macroeconomic headwinds, especially during periods of heightened geopolitical tension and tightening financial conditions.

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How Could Trump Tariffs Impact Global Economy Market?

For decades, global trade operated under a framework of tariff rates established through agreements between the United States and 122 other countries during the 1980s and 1990s. That long-standing system was upended on Wednesday when President Donald Trump announced sweeping new tariffs, asserting that other countries had exploited the system and “ripped off’’ the United States for years, causing its once-mighty manufacturing base to shrink.

Under the new measures, goods imported from dozens of countries and territories will now face significantly higher tariffs—some reaching as high as 50%. These steep duties are intended to penalize countries that Trump accuses of imposing unfair trade barriers, limiting U.S. exports, and contributing to chronic trade deficits.

However, the move has sparked fears of a global trade war, with economists warning that retaliatory measures from affected nations could lead to reduced international trade, higher consumer prices, and potentially a U.S. recession. Markets have reacted sharply to the news, as investors brace for the broader economic consequences of escalating trade tensions.

According to S&P Dow Jones Indices, the fallout has already been severe. In the two trading sessions following the tariff announcement, global stock markets lost an estimated $7.46 trillion in market value. Of that, $5.87 trillion was wiped from the U.S. stock market alone, with an additional $1.59 trillion erased from other major international markets—underscoring the far-reaching impact of the tariff escalation on investor confidence worldwide.

Late Sunday, Dow Jones Industrial Average futures dropped more than 4%, S&P 500 futures slid nearly 5%, and Nasdaq 100 futures plummeted 5.3%—signaling a rough start to the trading week.

How Might Tariffs Affect Bitcoin and the Whole Crypto Market?

The crypto market initially surged—adding over half a trillion dollars in value—after President Donald Trump unveiled a new strategic reserve last month.

However, that momentum began to reverse last week, as the president reaffirmed his commitment to implementing restrictive tariffs, emphasizing that he would not back down from his trade policy agenda.

On Sunday, the price of Bitcoin fell by approximately 7%, reflecting growing volatility across global financial markets in response to Trump’s tariff announcements. As of press time, BTC is traded at $ 94607.4100, boasting a market cap of $ 1,878.6B, and witnessing a hefty 24-hour trading volume of $ 31.6B. BTC saw a 24-hour price change of -0.06%, with minor fluctuations of -0.13% in the past hour.

Bitcoin Price

Other major cryptocurrencies fared even worse: Ethereum and Solana each dropped around 12% over the past 24 hours, while the broader crypto market declined by roughly 7% during the same period.

With economic uncertainty at a peak and investors seeking safe havens from mounting market turbulence, the future of the crypto sector hangs in the balance. It remains unclear whether these tariffs will significantly damage the industry—or whether digital assets will simply be pulled down alongside other risk assets.

According to crypto analysts, Bitcoin’s price is likely to continue tracking global equity markets amid the ongoing economic unrest. Any potential upside from the Trump administration’s relatively hands-off stance on crypto regulation may be overshadowed by broader concerns over financial instability and declining investor confidence.

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