Bitcoin Falls Amid Trump Tariffs Impact
The cryptocurrency market faced a sharp downturn on Monday, with Bitcoin plunging to a three-week low as investor fears over escalating trade tensions rattled global financial markets.
Bitcoin, the world’s leading cryptocurrency, slumped to $91,441.89 overnight before slightly recovering to $95,730.35 by 09:41 GMT, marking a 6.2% decline for the day. Ethereum (ETH) fared worse, shedding nearly 25% of its value since Friday, the steepest three-day drop since November 2022, currently trading at $2,592.14.
The sell-off was triggered by U.S. President Donald Trump’s unexpected announcement over the weekend of sweeping tariffs: 25% on Mexican and Canadian imports and 10% on Chinese goods, effective Tuesday. In response, Canada and Mexico pledged retaliatory measures, while China vowed to challenge the tariffs at the World Trade Organization.
The ripple effects were felt across the crypto landscape, with almost a quarter of the top 100 digital currencies losing over 20% of their value in the past 24 hours, according to CoinGecko. Shares of U.S. crypto exchange Coinbase (NASDAQ: COIN) also dipped 5.5% in pre-market trading.
Even Trump's own cryptocurrency, $TRUMP, launched shortly before his inauguration, tumbled below $20 after previously peaking above $73 in January.
Crypto: A Weekend Risk Proxy
"Cryptocurrencies have become a barometer for investor sentiment, especially over weekends when traditional markets are closed," noted Chris Weston, head of research at Pepperstone. "With heightened geopolitical tensions, crypto serves as a proxy for risk-on/risk-off dynamics."
Despite the broad market decline, Bitcoin outperformed Ethereum, which experts attribute to its perception as a 'safe-haven' asset akin to gold. "Bitcoin's resilience amid this volatility highlights its evolving role as a risk-off asset," said Joseph Edwards, head of research at Enigma Securities.
Disappointment Over Trump’s Crypto Policies
The recent downturn also reflects growing investor disappointment with the Trump administration’s crypto policies. After an initial rally following his election, fueled by hopes of crypto-friendly regulations, many feel let down by the lack of substantial action to support the industry.
Bitcoin had soared to an all-time high of $107,071.86 on January 20, coinciding with Trump’s inauguration, and had risen 40% since his election in November. Although Trump, once a vocal critic of cryptocurrencies, embraced digital assets during his campaign, promising to establish the U.S. as the "crypto capital of the planet," his administration's follow-through has been underwhelming.
"There was significant anticipation for government initiatives to boost crypto adoption, including potential federal Bitcoin acquisitions," said Paul Howard, senior director at Wincent. "While those hopes remain unfulfilled, we believe the organic growth of the sector, supported by a relatively crypto-friendly administration, will eventually outweigh short-term volatility."
Looking Ahead
As global markets brace for continued trade tensions, the crypto sector's next moves will likely hinge on geopolitical developments and investor reactions to fiscal policies. For now, traders are advised to monitor macroeconomic indicators closely, as the digital currency landscape remains highly sensitive to global economic shifts.
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