Bitcoin Unable to Justify Status as 'Digital Gold' says DZ Bank

Bitcoin Slides as Trump's Tariff Policies Shake Markets, DZ Bank Warns of Continued Uncertainty.

The cryptocurrency market is feeling the heat as Bitcoin and alternative digital assets face steep sell-offs, weighed down by mounting economic uncertainty and geopolitical tensions.

A new report by DZ Bank, authored by Marcel Heinrichsmeier, highlights the sharp downturn in crypto markets, attributing the slump to former President Donald Trump's aggressive tariff policies and investor unease over a possible return to trade wars.

"The crypto market cannot escape the current global economic uncertainty," he wrote in the report. "Trump's tariffs have unsettled investors, leading to a more cautious positioning across risk assets, including Bitcoin and altcoins."

Bitcoin, the world’s largest cryptocurrency, temporarily fell below $100,000, shedding nearly 15% of its value before rebounding to $98,000.

At its lowest point, BTC touched $91,000, marking one of its sharpest corrections in recent months. The broader crypto market was not spared, losing $600 billion in total market capitalisation, sinking below the $3 trillion mark.

Other major cryptocurrencies took an even harder hit. Many alternative tokens (altcoins) lost between 30-40% over the past week, while Ethereum (ETH) briefly fell to its lowest price since August 2024.

Bitcoin's Safe-Haven Narrative Faces a Reality Check

Despite being touted as "digital gold," Bitcoin has struggled to maintain its reputation as a safe-haven asset in times of crisis.

Instead of acting as a hedge, the cryptocurrency has tracked broader market weakness, a trend that worries some analysts.

"In recent days, Bitcoin has not been able to justify its status as 'digital gold' and a safe-haven asset during times of economic distress," the report stated. "However, it still remains the dominant force in the crypto sector, with its market dominance now exceeding 60%."

Ripple (XRP) and Solana (SOL) Show Resilience Amidst Turmoil

While the market correction has been severe, two major cryptocurrencies, XRP and Solana (SOL), have shown relative resilience. According to DZ Bank, their strength is driven by optimism surrounding potential spot ETF approvals and the possibility that they could play a role in a U.S. "Digital Assets Reserve."

Trump’s administration has recently taken steps to explore a regulatory framework for digital assets, with a working group set to evaluate the crypto sector over the coming months. “The evaluation of a possible 'Digital Assets Stockpile' is in the spotlight,” the report noted, hinting at potential long-term bullish catalysts.

What’s Next for Bitcoin and the Crypto Market?

The crypto market remains highly volatile, and further economic headwinds could keep prices under pressure in the short term. However, regulatory clarity from the U.S. government may provide a long-term tailwind.

"While global economic uncertainties will likely continue to weigh on Bitcoin and cryptocurrencies, the regulatory direction from U.S. policymakers remains a key factor to watch," Heinrichsmeier concluded.

With investor sentiment on edge, all eyes are now on how Trump's policies, economic data, and regulatory developments shape the next chapter for Bitcoin and the broader digital asset market.