Tariff Jitters Send Bitcoin Below $65K, Erasing $500M in Leverage as Risk Appetite Fades

Bitcoin’s slide under $65,000 was a liquidity story masquerading as a headline move. During early Asian trading, price fell about 4.6% from $67,600 to $64,435 in under two hours, according to market data, before stabilizing near $66,280 and finishing the session down roughly 2.7%. The downdraft set off more than $505 million in liquidations across crypto over 24 hours, with Bitcoin positions contributing $232 million and Ethereum $126 million, per derivatives dashboards.

There was no single shock. Instead, policy uncertainty and geopolitics forced a top-down repricing of risk. A U.S. Supreme Court ruling on Friday deemed “reciprocal” tariffs illegal, and yet a sweeping 10% global tariff was announced in response—exactly the kind of ambiguity that pushes capital to the sidelines. Layer on sticky December PCE inflation, Middle East tensions lifting crude to periodic highs, and rates markets largely removing the chance of a March cut, and you get a broad risk contraction rather than a crypto-specific event.

Futures now imply a 96% probability the Fed holds at 3.50% to 3.75% at the next FOMC meeting, up from 90% last week, per FedWatch. On prediction platforms, the market is marking down both macro easing and crypto upside: the odds of more than a 25 bps cut before July sit near 21%, down from 40% earlier in the month. Separately, traders assign a 37% chance that Bitcoin’s next decisive move reaches $84,000, a pullback from 46.4% on Sunday. Meanwhile, gold gained 1.23% to 5,166 per ounce, underscoring the risk-off tilt.

Here’s the part most traders underestimate: Bitcoin remains treated—by allocators, desks, and risk systems—as an instrument on the outer edge of the risk spectrum. That framing matters. When policy is in flux and inflation feels sticky, capital with a high bar for liquidity won’t rush into assets that depend on continuous funding and deep order books to absorb shocks. In thinner Asian hours, with perps and basis trades leaning long, a modest macro nudge becomes a cascade: stops trigger, funding flips, and market makers widen spreads, amplifying the move. The $500 million in forced unwinds wasn’t the cause; it was the transmission mechanism.

This is why short-lived bounces often look like “technical repairs” rather than trend transitions. Without fresh, durable inflows, rallies rely on short covering and mean reversion instead of new risk budgets. Prediction markets echo that reluctance: reduced odds of both near-term policy easing and an $84K impulse suggest sidelined capital is waiting for alignment across key signals—cooler inflation, stable energy, clearer geopolitics, and, crucially, resilience in traditional risk assets. If equities remain under pressure, expecting crypto to decouple meaningfully is optimistic.

My playbook in tapes like this stays disciplined: treat rebounds as tactical until liquidity sponsorship broadens; watch the rate path (not just the level), oil’s drift, and earnings-driven equity stability; monitor derivatives for cleaner positioning and normalized funding. The next durable leg likely requires convergence of those macro pillars, not a single crypto-native catalyst.