Since United States President Donald Trump took over the White House, the crypto market has mostly underperformed, with bitcoin (BTC) reacting negatively to most policy changes. The latest policy change—the confirmation of reciprocal tariffs on global trades—has triggered a market-wide reaction, with participants wondering if this is a desired effect.

The on-chain analytics platform Santiment revealed that the market is not reacting as crypto bulls expected. Since Trump confirmed the tariffs, BTC has lost at least $5,000, and most altcoins are in the red.

Potential Effects of the Tariffs

Trumps tariffs are meant to encourage American citizens to buy domestic goods instead of international products. Some advantages include bolstering production and purchasing within the U.S. and raising additional income that could fund domestic projects and reduce budget deficits.

However, like any other government policy change, tariffs have some cons. Consumers will witness an increase in prices since imported goods will become more expensive, an economic slowdown due to decreased global trade, and a potential trade war as foreign countries retaliate with their own tariffs.

As tariffs trigger uncertainty at the global economic level, traditional financial markets are affected, too. Global stocks are plunging, and U.S. futures indexes are declining. Although the tariff announcement was timed shortly after stock markets closed on April 2 to avoid a massive negative reaction, Santiment believes that Wall Street will still experience a huge sell-off when the regular trading session starts.

Are Traditional Investors Turning to Crypto?

Many crypto analysts argued that the uncertainty in traditional financial markets could lead investors to move their money from stocks and bonds to cryptocurrencies as an alternative asset. However, investors main reaction so far has been capital inflows into more traditional safe havens like gold and silver, which are not affected by economic conditions.

While BTC struggled in the first quarter due to macroeconomic conditions, gold kept hitting new all-time highs (ATHs). After a three-month 20% surge, the precious metal is currently trading at approximately $3,190. Within the same timeframe, BTC has mostly correlated with the SP 500, recording a few temporary cases of decorrelation. Altcoins, on the other hand, have performed even worse.

While the crypto market continues to react negatively, some analysts believe the tariffs will eventually trigger bullish momentum in the coming months as countries cave in and lower their tariffs against the U.S. As they insist that this is a short-term pain, long-term gain scenario, others believe the crypto and stock markets are in for a lengthy, rough ride.