Bitcoin and geopolitics: an increasingly sensitive asset
Bitcoin is often presented as an asset decorrelated from traditional markets. The reality is more nuanced: while Bitcoin retains its own dynamic linked to its fundamentals (halving, adoption, on-chain), it is increasingly sensitive to major geopolitical shocks — regulation, trade war, state adoption.
The 2025 trade war
The Trump administration's announcement of "reciprocal" tariffs on April 2, 2025 triggered the S&P 500's largest weekly decline since March 2020 (-9%). Bitcoin retreated from $88,000 to $74,500 over the same period (-15%). The 7-day correlation between Bitcoin and the S&P 500 temporarily rose to 0.78 — a high level reflecting generalised risk asset selling.
This type of exogenous liquidity shock — unrelated to Bitcoin's fundamentals — has historically been followed by rapid recoveries once panic dissipates. The trade truce announced on May 12, 2025 enabled a full recovery toward $108,000 within weeks.
US regulation as a catalyst
The United States has become the primary regulatory market for Bitcoin since 2024. Donald Trump's election in November 2024 marked a turning point: Gary Gensler's resignation from the SEC, cancellation of SAB 121 that blocked banks, creation of a Strategic Bitcoin Reserve, and advancement of the CLARITY Act in Congress.
These decisions had a direct impact on ETF flows and price. Bitcoin jumped 28% in one week after the election, driven by anticipation of a favourable regulatory environment.
State adoption
El Salvador was the first state to adopt Bitcoin as legal tender in 2021. Bhutan holds Bitcoin reserves from mining. In March 2025, the United States formalised its Strategic Bitcoin Reserve with approximately 200,000 BTC confiscated through legal proceedings. This precedent could encourage other nations to build similar reserves.
What geopolitics does not determine
Geopolitical events create short-term shocks but do not determine Bitcoin's underlying trend, which remains tied to its halving cycle, institutional adoption and on-chain data. BTCMACRO systematically analyses geopolitical impact in its weekly analyses.