Bitcoin Drops as Global Trade Tensions Escalate Ahead of U.S. Reciprocal Tariffs

Bitcoin fell on Friday amid a broader risk-off mood as global trade tensions escalated ahead of U.S. reciprocal tariffs

Investing.com - Bitcoin price fell on Friday amid a broader risk-off mood as global trade tensions continued to simmer ahead of U.S. reciprocal tariffs, while investors cautiously awaited a crucial inflation report later in the day for clues on the Federal Reserve's interest rate trajectory.

The world’s largest cryptocurrency fell 1.6% to $85,910.50 by 01:23 ET (05:23 GMT).

President Donald Trump announced on Wednesday the imposition of a 25% tariff on all foreign-made cars and auto parts, effective April 2. In response, Canadian Prime Minister Mark Carney stated that the longstanding trade relationship with the U.S. is "over," advocating for a complete renegotiation of trade agreements between the two nations.

Carney also vowed to retaliate if U.S. President Donald Trump enforces new auto tariffs. Trump is also set to enforce separate global reciprocal tariffs on April 2, targeting nations with significant trade imbalances with the U.S.

These developments have heightened investor concerns about an all-out global trade war, leading to a broader risk-off sentiment in financial markets. This resulted in a substantial sell-off in global stock markets. Major U.S. stock indexes closed lower on Thursday, while most Asian stock indexes experienced declines in early Friday trading.

In such environments, investors tend to move away from volatile assets like cryptocurrencies and prefer traditional safe-haven assets such as gold.

Gold was trading at a record high in Asian trading on Friday.

Investors are also keeping a close eye on the release of the Personal Consumption Expenditures (PCE) price index data later Friday.

The Fed maintained interest rates at 4.25% to 4.5% during its March 19 meeting as it assessed the increased uncertainty in the economic outlook. The central bank anticipates two rate cuts this year to support economic growth. However, recent tariff policies introduced by President Trump have complicated the inflation landscape.