Bitcoin Drops 10% Amid Tariff Fears, Institutional Sell-Offs

Bitcoin began the week under pressure, trading slightly above the $82,000 support level, despite positive developments earlier in the month. These developments included a proposal for a U.S. cryptocurrency reserve that would incorporate Bitcoin, Ethereum, XRP, Solana, and Cardano. Additionally, GameStop’s decision to allocate $1.3 billion to Bitcoin underscored a growing trend of corporate adoption, adding to the market’s bullish sentiment.

However, some market analysts attribute Bitcoin’s recent decline to macroeconomic factors and options expirations, while others point primarily to concerns over U.S. tariffs, which are set to take effect later in the week. Market expert Shay Boloor noted that the market is reacting to the idea of uncertainty being introduced into an already fragile macro narrative. The fear around April 2 is based on what might happen if new, unexpected structural policies are introduced, with businesses already pricing in worst-case scenarios. This psychological unwinding has triggered forced risk reduction across multiple sectors, contributing to Bitcoin’s downward trajectory.

On-chain data from Santiment reveals that Bitcoin ETFs are undergoing a critical institutional reshuffling and de-risking phase. After a strong accumulation phase, Bitcoin ETF inflows have reversed sharply in 2025, experiencing a $5 billion drawdown from all-time highs, marking a shift in trend from minor outflows to significant institutional sell-offs.

Despite the market downturn, large investors appear to be taking advantage of lower prices. On-chain data indicates a substantial withdrawal of Bitcoin from exchanges, a potential sign of accumulation. Over 30,000 BTC have been withdrawn from exchanges in the past week, according to on-chain data from Santiment. Crypto analyst Ali Martinez highlighted this observation, noting that experienced market participants have shifted into an accumulation phase. Four distinct accumulation phases have occurred during this bull cycle, with the latest phase unfolding in March 2025. Seasoned investors who previously sold at local peaks have now transitioned into a holding phase, as indicated by minimal Value Days Destroyed (VDD) levels.

The absence of significant selling suggests confidence that current BTC prices are not ideal for profit-taking. Historical trends indicate that periods of low VDD have typically preceded price increases, reinforcing the potential for a future BTC rally. The withdrawal of such a large amount of Bitcoin from exchanges reduces the supply available for trading, which could potentially drive up the price if demand remains steady. This movement suggests that investors may be holding onto their Bitcoin rather than selling, which could be a sign of bullish sentiment.

The reduction in the supply of Bitcoin on exchanges is a notable development, as it often signals that investors are looking to hold their assets for the long term rather than engage in short-term trading. This behavior can be indicative of a market bottom, where investors believe that the price of Bitcoin has reached a low point and are positioning themselves to benefit from a potential price increase. The withdrawal of Bitcoin from exchanges also suggests that investors may be moving their assets to personal wallets or other storage solutions, further reducing the supply available for trading.

The market's reaction to this development will be closely watched by traders and analysts alike. If the price of Bitcoin continues to rise in the coming days and weeks, it could confirm that the market has indeed reached a bottom and that a new bull run is underway. However, if the price fails to sustain its gains, it could indicate that the market is still in a state of uncertainty and that further price declines may be possible. Traders will be paying close attention to key support and resistance levels, as well as other technical indicators, to gauge the market's direction in the coming days.