tl;dr
While retail investors panic over political news like Trump's tariffs, savvy traders are buying low and reaping the rewards as crypto markets rebound. Santiment's analysis reveals a recurring pattern of fear-driven sell-offs followed by strategic buying opportunities.
**Smart Traders Buy Amid Retail Panic as Trump Tariffs Spark Crypto Volatility**
In a stark illustration of the emotional undercurrents driving cryptocurrency markets, “smart traders” have capitalized on retail investors’ overreactions to U.S. political developments, snapping up Bitcoin and altcoins amid recent volatility. According to onchain analytics platform Santiment, the fallout from President Donald Trump’s proposed 100% tariffs on Chinese goods last week triggered a sharp sell-off, but savvy investors saw opportunity in the chaos.
### Retail FUD and the “Opposite” Price Movement
Santiment analyst Brian Q highlighted a recurring pattern: retail investors’ fear often leads to abrupt sell-offs, only for prices to rebound as the market realizes the news was overblown. “Retail’s emotions often dictate that Bitcoin’s and altcoins’ prices are about to do the opposite,” Q wrote in a blog post.
The latest tariff announcement by Trump on July 16, 2025, sparked a crash in crypto markets, with the Fear & Greed Index plummeting to a two-month low of 24 on July 20. However, the panic was short-lived. After Treasury Secretary Scott Bessent clarified that the tariffs “don’t have to happen,” retail investors returned to the market, allowing “smart traders” to accumulate assets at discounted prices.
### A Year of FUD-Driven Volatility
This episode is part of a broader trend in 2025, where geopolitical tensions and political rhetoric have repeatedly shaken crypto markets. Santiment identified four key dates this year where “peak crowd fear” drove sell-offs:
1. **April**: Initial global tariff announcements.
2. **June**: Middle East tensions involving Iran, Israel, and the U.S.
3. **August**: Concerns over the Federal Reserve’s potential failure to cut interest rates.
4. **July**: Trump’s tariffs on China.
“Smart traders scooped up more while the crowd was in panic on each of these dates,” Q noted. Retail investors, he added, often “come back once they realize the news was overblown,” creating a cycle where panic leads to buying opportunities.
### The Role of Political News in Crypto Sentiment
The latest bout of fear was amplified by the sheer volume of crypto discussions centered on Trump’s trade policies. Retail investors expressed their “highest negativity level all year,” according to Q. However, the market’s rapid recovery underscores the extent to which political news—despite its unpredictability—shapes short-term crypto behavior.
“Emotional trading tied to political news continues to dominate short-term market behavior, arguably more than ever in crypto’s 17+ year history,” Q said.
### Kraken Survey Reinforces FUD’s Impact
A December 2024 survey by crypto exchange Kraken of 1,248 users revealed that 81% of respondents were influenced by fear, uncertainty, and doubt (FUD) when investing. Additionally, 63% admitted emotional decisions had negatively impacted their portfolios. The data aligns with Santiment’s analysis, highlighting the persistent role of psychology in crypto markets.
### Fear & Greed Index Reflects Market Sentiment
Despite Bitcoin’s recent recovery, the Crypto Fear & Greed Index remains in “fear” territory, with a score of 38 for the second consecutive day. The index hit a two-month low of 24 on July 20, reflecting the depth of panic during the tariff-driven sell-off. Last week, the average score had been in “greed” territory (70), illustrating the extreme volatility driven by external events.
### Conclusion: A Market Shaped by Emotion
As Santiment’s analysis shows, crypto markets are increasingly susceptible to emotional swings fueled by geopolitical events and political rhetoric. While retail investors often act on fear, “smart traders” exploit these moments to accumulate assets, reinforcing the cyclical nature of crypto’s volatility. With the Fear & Greed Index signaling ongoing caution, the interplay between political developments and market sentiment will likely remain a defining feature of 2025.
In this environment, the lesson for investors is clear: while fear can drive short-term chaos, it also creates opportunities for those who remain disciplined and attuned to the broader narrative.