The past week has delivered one of the strongest clusters of bullish developments the digital asset market has seen in months. Major political endorsements, national level Bitcoin accumulation, institutional breakthroughs, and signs of growing regulatory clarity should have been enough to push risk assets meaningfully higher. Yet Bitcoin has remained heavy at the top of its range. Each attempt to move upward has been met with abrupt long liquidations triggered by sudden policy comments or unpredictable tariff related remarks from President Trump. The result is a market in a defensive crouch even as the fundamental news flow points upward.
Across global headlines the bullish tone has been clear. Nigel Farage committed to creating a Bitcoin Reserve if elected in the United Kingdom, signalling that political figures are no longer afraid to tie themselves openly to digital assets. China stated that there is significant room for economic cooperation with the United States, a remark that normally lifts global risk sentiment. The first spot XRP ETF launched in the United States, a milestone that confirms institutional acceptance of large cap crypto assets. The Czech Central Bank disclosed a one million dollar Bitcoin purchase. Michael Saylor reiterated his belief that Bitcoin will surpass the market cap of gold by 2035. El Salvador executed another one hundred million dollar buy, reinforcing its long term accumulation strategy. Even United States regulatory discussions have turned more constructive, with Coinbase’s chief executive noting that progress on market structure legislation has accelerated.
In ordinary conditions this type of news sequence would not only support Bitcoin but often trigger multi week rallies. Historically, political endorsements coupled with sovereign purchases tend to reset market confidence. ETF approvals usually bring new liquidity. Macro cooperation between the world’s largest economies is treated as a green light for risk taking. However the current environment is dominated by a different force. The market has become hypersensitive to Trump’s rapid and often contradictory tariff messaging. Investors have watched several episodes in which a single tweet or unexpected tariff comment has wiped hundreds of millions of dollars worth of leveraged long positions in minutes. This pattern has created a psychological ceiling that is proving difficult to break.
A simple backtest of the second Trump term shows how consistent this damage has been. In early February 2025, a new round of tariffs aimed at multiple trading partners sparked a four hundred billion dollar wipeout in crypto market value and roughly 2.2 billion dollars in liquidations, one of the largest shakeouts of the year. At the start of March, the announcement of twenty five percent tariffs on Canada and Mexico coincided with another sharp sell off, with Wall Street closing lower and analysts tracking an estimated three hundred billion dollars erased from digital assets as traders rushed to unwind leverage. Later that month and into April, so called Liberation Day tariffs triggered a full scale global crash. New barriers on a wide range of imports pulled the S&P 500 down around ten percent in two days and removed roughly five trillion dollars from United States equities, while Bitcoin fell about six percent in twenty four hours and crypto broadly slumped on the same headlines.
The pattern did not stop there. In late May, a public recommendation for a fifty percent tariff on European Union goods sent European stocks and bonds sharply lower and dragged United States futures down again, reinforcing the message that a single statement from the White House could override any positive macro narrative investors were trying to build. On multiple smaller occasions through the year, renewed tariff threats briefly knocked Bitcoin three to four percent lower in a day and wiped out more than one hundred billion dollars in crypto market value, even when underlying demand and funding flows were stable.
The clearest example came in October. One social media post accusing China of being “very hostile” and threatening a massive increase in tariffs was enough to produce the worst day for United States stocks since April, with the S&P 500 down 2.7 percent and the Nasdaq down 3.6 percent. In crypto, the move was even more violent. As Trump followed the post with a formal announcement of one hundred percent tariffs on Chinese exports, Bitcoin dropped more than ten percent in twenty four hours, falling below 110,000 dollars, while major altcoins crashed between fifteen and thirty percent. Analysts estimate that around nineteen billion dollars of leveraged crypto positions were liquidated in the following day, the largest notional deleveraging in the market’s history. This is exactly the type of sudden event that forces longs out at the worst possible moment and leaves traders wary of rebuilding size even when prices stabilise.
This sequence of episodes explains why the current backdrop feels so contradictory. On paper, Bitcoin sits in a world where governments are accumulating, traditional finance is launching ETFs, and political candidates openly talk about building reserves in digital assets. In practice, traders have been trained by repeated shocks to expect that any tweet, press conference, or off the cuff remark about tariffs can instantly flip the tape and trigger liquidation cascades. That behavioural conditioning matters. Every new Trump statement is treated less like a policy detail and more like a volatility bomb that can detonate without warning.
The result is an unusual split in sentiment. Long term investors are encouraged by the broadening institutional and political acceptance of crypto and are willing to accumulate on dips. Short term traders remain defensive, keeping leverage low and taking profits quickly, because they have seen how often a sudden tariff threat can erase a week of gains in a single session. Until that behaviour stabilises, Bitcoin may continue to face difficulty breaking higher despite fundamentals that point toward growth. The bullish catalysts are present and powerful, yet the market’s willingness to act on them is being repeatedly challenged by the shock impact of erratic policy communication at the highest level. In this environment, price is not only reflecting what is happening in the real world, it is pricing in the next tweet.
