Bitcoin tumbled below $84,000 on Wednesday, sliding more than 5% in the past 24 hours, as U.S. President Donald Trump announced plans to impose a 25% tariff on the European Union.

Speaking during his first cabinet meeting, Trump said, “We have made a decision, and we’ll be announcing it very soon. It’ll be 25 per cent,” as reported by the Financial Times. The president also criticized the EU’s trade practices, claiming that “the EU was formed to screw the US.”

Stocks turned lower on Wednesday, reversing earlier gains, with the S&P 500 heading for its fifth consecutive day of declines.

The Dow Jones Industrial Average lost 0.4%, after rising as much as 245 points earlier in the day. The S&P 500 dipped less than 0.1%, while the Nasdaq Composite held onto a modest 0.1% gain.

Market reacts to Tariff shock

The latest drop in Bitcoin comes after a strong rally that saw it surge past $85,000 earlier this month.

However, Alex Thorn, Head of Research at Galaxy Digital, pointed out that Bitcoin lacks strong support between $75,000 and $85,000. “There’s mostly air between $75-85k,” he said. “Almost no coins were moved onchain in that range, as we rocketed through it very quickly in Nov. Market may want to test that range. 200d MA is $81.6, which could provide support if we test it.”

Ether (ETH) also followed Bitcoin’s decline, dropping to $2,330, while other major cryptocurrencies like BNB, Solana also posted losses amid the market-wide selloff.

Inflation concerns rise as tariffs loom

Trump’s tariff announcement raised concerns about inflation, with analysts predicting higher costs for consumers and businesses. A 25% tariff on EU goods, along with similar tariffs on Canada and Mexico, could push up the price of vehicles and food products in the U.S.

The Kobeissi Letter reported that a tariff of this scale could add around $3,000 to the price of some of the 16 million cars sold in the U.S. annually. Meanwhile, food costs are also expected to rise, as Mexico supplies over 60% of fresh produce to the U.S.

Bitcoin vs. Gold: A diverging hedge?

Interestingly, while Bitcoin is often touted as a hedge against uncertainty, the recent market moves have told a different story. Since the trade war headlines emerged, Bitcoin has dropped 10%, while gold has surged 10%.

“Our premium members have cashed in multiple gold LONGS, including multiple dip buys in 2025,” wrote The Kobeissi Letter. “We recently called for $2,950+ which officially hit last week.”

The divergence raises questions about Bitcoin’s role as a safe-haven asset, especially during periods of heightened market volatility.