Bitcoin investors may not exactly feel it, but BTC has been a relatively good bet since President Trump’s tariff plans last week resulted in historic losses in traditional markets. While stocks and other mainstream investments have been falling off a cliff since the “Liberation Day” announcement April 2, bitcoin has remained relatively steady losing “only” 8% of its value.

“I think this is the most bullish 8% drawdown I’ve ever seen in bitcoin,” said Zach Pandl, head of research at Grayscale, a leading crypto investment manager.

Based on historical data, you would expect bitcoin to have three times the volatility of the Nasdaq, Pandl said. And yet while the Nasdaq was down 15% at the beginning of trading April 8 (compared to April 2), bitcoin was nowhere near 45% down.

In other words, an 8% decline is a positive as historical patterns predicted a far steeper tumble.

“I think crypto investors should be extremely pleased with the modest pullback in bitcoin,” Pandl, a former analyst at Goldman Sachs, told CoinDesk.

“It reflects that tariffs — while they are a short term risk-off event for markets — are probably to be something that’s supportive for bitcoin adoption in the longer run. I think the relatively moderate drawdown reflects that,” he added.

Pandl is bullish on bitcoin in an environment where the dollar is potentially losing its place as a global reserve currency.

“Stagflation is going to be negative for stocks and bonds, and, historically, that has been positive for scarce commodities. Investors who are concerned by stagflation are looking for alternative assets that can drive returns. In traditional markets that might be gold or copper, and bitcoin,” he said.

Pandl says bitcoin’s relatively good performance reflects a rotation away from large-cap tech stocks towards commodity assets like bitcoin. You can see this in the performance of bitcoin against Roundhill “Magnificent 7 ETF.” You can now buy more of that ETF with one bitcoin compared to a week ago.

To those who subscribe to Bitcoin’s long-term investment thesis as a safe haven in uncertain times, the last few days have been a test case where bitcoin is winning. In theory, say these advocates, bitcoin should benefit as investors seek alternatives to dollars in times of stress.

“If you believe that the erosion of the dollar’s position is part of the bitcoin thesis, then your conviction in that thesis in the last week should have gone up,” Pandl says.

He expects bitcoin’s price to rise in the medium-term, reaching new all-time-highs this year.

“The price of bitcoin is down but conviction is up and there’s no need to change the medium term price outlook,” he said.

The crypto market’s relief rally fizzled out on Tuesday as stocks gave up big early gains and turned lower alongside the Trump administration’s plan to imminently enforce punitive tariffs against China.

After staging a brief rally to the $80,000 mark, bitcoin (BTC) had slumped back to $76,500 before stabilizing below $78,000. Recently, the top cryptocurrency was down 1.2% in the last 24 hours, while ether (ETH) lost nearly 4% over the same period and fell below $1,500. The CoinDesk 20 — an index of the top 20 cryptocurrencies by market capitalization, except for stablecoins, memecoins and exchange coins — was down 2.2%.

Crypto equities have also taken a hit, with bitcoin miner Bitdeer (BTDR) leading the way with a 8.7% loss. Strategy (MSTR) is down 5.3% and Coinbase (COIN) 2.3%. One outlier is DeFi Technologies (DEFTF), which is up 10.27%, potentially due to an expectation from some of its shareholders that the Toronto-based company could soon follow in Galaxy Digital’s (GLXY) footsteps and get listed on the U.S. Nasdaq.

Meanwhile, the S&P 500 and Nasdaq are down 0.5% and 0.7%, respectively — modest losses, but sharply reversed from roughly 4% advances earlier in the session.

The price action happened as the White House announced during the day that 104% additional tariffs on Chinese goods would take effect at midnight on Tuesday. The tariff news put additional pressure on the Chinese currency, with the offshore yuan (CNH) rapidly depreciating against the U.S. dollar during the day to 7.4, its weakest levels in years.

Some have suggested that Beijing could respond to the tariffs by allowing a sizable weakening in the yuan, thus making China’s exports more competitive than otherwise. Bitcoin bulls have seized on that idea, noting a devaluation in the yuan would surely lead to capital flight from China, with at least some of that money potentially looking to hide out in bitcoin.

«If not the Fed then the PBOC will give us the yahtzee ingredients,» wrote Arthur Hayes. «It worked in 2013 , 2015, and can work in 2025,» he continued. «Ignore China at your own peril.»

Read more: Bitcoin Analysts Optimistic as China Surprisingly Fixes Yuan Beyond 7.2 Level

«We are currently in a phase of heightened uncertainty, with persistent trade disputes, geopolitical friction, active conflicts and growing fears of a global slowdown,» Kirill Kretov of cryptocurrency trading automation platform CoinPanel told CoinDesk in a Telegram note.

The choppy market conditions will likely remain, Kretov noted, with shallow liquidity on crypto and traditional markets exacerbating volatility. «Until more participants adjust to and capitalize on this environment, we’re unlikely to see a strong directional trend,» he added.

Borrowing demand across decentralized finance (DeFi) protocols plunged sharply in the wake of the recent crypto market turmoil, a sign of widespread deleveraging as crypto investors unwound risky positions.

The average U.S. dollar stablecoin yield — what protocols pay out to lenders for lending out their assets — fell to 2.8% on Tuesday to its lowest level in a year, measured by DeFi yield-earning application vaults.fyi’s benchmark. That’s well below the average U.S. dollar money market rates on traditional markets (4.3%), and a hefty decline from mid-December’s crypto market peak, when DeFi rates topped 18%.

«This is largely due to the market moving towards a risk-off environment where borrowing across protocols has decreased significantly,» said Ryan Rodenbaugh, CEO of Wallfacer Labs, the team behind vaults.fyi.

The move reflects risk-off sentiment spreading across crypto markets, with investors pulling back leverage amid volatile price swings. As users repay loans and liquidations clear out under-collateralized positions, demand for borrowing dips. Meanwhile, deposits available for lending on protocols remained stable, per vaults.fyi data, meaning that declining revenue from borrowers are spread among the same amount of lenders, exerting downward pressure on yields.

That’s a «negative double-whammy» for the rates that the remaining lenders are getting paid, Rodenbaugh said.

The sharp decline in yields and deleveraging was exacerbated by this weekend’s carnage in crypto markets, as major DeFi lending protocols reported a wave of liquidations amid rapidly plunging asset prices. Bitcoin (BTC) and Ethereum’s ETH, two assets predominantly used as collateral for crypto loans, suffered 10%-15% declines below $75,000 and $1,500, respectively.

Aave, the largest decentralized lending market by total value locked (TVL), processed over $110 million in forced liquidations during the Sunday-Monday market decline, Omer Goldberg, CEO of DeFi analytics firm Chaos Labs, noted citing on-chain data.

Sky (formerly MakerDAO), issuer of the $7 billion USDS stablecoin and one of DeFi’s largest lending platforms, also liquidated an ether whale’s $74 million DAI loan collateralized by 67,570 ETH, worth $106 million at the time, on-chain data shows. Another large lender with 65,000 ETH in collateral scrambled to pay off portions of their $66 million loan to avoid a similar fate, bringing down the outstanding debt to $28 million.

The total value of borrowed assets on Aave dropped to $10 billion on Tuesday, a sharp drop from over $15 billion in mid-December, DefiLlama data shows. Morpho, another key lending protocol, saw a similar drop to $1.7 billion from $2.4 billion during the same period, per DefiLlama.