Good day everyone,
I hope you are all having a good day, welcome to CryptoGod-1's blog on all things crypto. In this post I will be looking at the crypto market reaction to Trump's tariffs.
Crypto Crashing with Trump Tariffs
Major downward movement was noted in the cryptocurrency market as it suffered its worst day in over a year. Almost half a trillion dollars was wiped off the market in just 24 hours as US President Donald Trump announced tariffs on Canada, Mexico, and China last weekend. This raised fears of a potential global trade war. Both Canada and Mexico have agreed new border measures to delay the tariffs by 30 days, but the news rocked the stock markets throughout Europe, Asia and the US.
Crypto trading is not limited to traditional trading hours, meaning investors were able to dump risky assets ahead of markets opening on Monday. Coins such as Ethereum (ETH) and Ripple (XRP) both lost around a third of their value over the weekend, while Solana (SOL) dropped by roughly a quarter. Bitcoin meanwhile dropped below the $100,000 mark but did manage to recover and is trading at $97,778.12 at the time of writing.
Of the worst hit it was so-called meme coins which saw the biggest drops, and the President Trump recently launched $TRUMP coin fell by 70 per cent from its peak. Bitcoin had fallen as low as $92,000 but did rebound to around $99,000 before settling at its current level. The drop for Ethereum was as much as 26.53% to $2,135 on Monday. This marked the largest drop in price for Ethereum in nearly four years and its largest intraday percentage drop since May 2021.
Over $2 billion in Bitcoin liquidations took place immediately after the announcement and it was the first time this year that total liquidations reached above $2 billion. A staggering $1.83 billion came from long liquidations as bullish traders were caught off guard with the change in market sentiment. CoinMarketCap’s Crypto Fear and Greed Index, which measures market sentiment, dipped into ‘fear’ for the first time since October 2024. Petr Kozyakov, co-founder and CEO at crypto platform Mercuryo, noted@
“A tidal wave of fear, uncertainty and doubt has been unleashed across the cryptocurrency market after Trump’s Friday tariff announcement. This once again underlines the highly speculative nature of meme tokens and the high risks that they pose to the uninformed.”
Analysts have noted that key support level of $92,000 for Bitcoin has held thus far, but it will be important to keep above this level. Should Bitcoin drop below then further sell-offs are expected. Analysts remain divided over the long-term consequences as some are predicting that the tariffs could weaken the dollar and lower US rates, potentially benefiting Bitcoin over time. Others feel that the potential trade war might spark immediate inflationary pressures and market corrections.
https://x.com/coingecko/status/1886238733470458360?mx=2
The tariffs will potentially hamper global trade and slow down economic growth and this in turn impacts disposable income and consumer spending. Investors therefore often have less capital available to invest in cryptocurrencies, although some trade policies can boost the strength of the US dollar and drive up the cost of Bitcoin. With crypto becoming more closely linked to traditional financial markets then any trade tensions which cause stock fluctuations or decline generally also impact the crypto market.
While Trump is promising the be the first ever “crypto president”, his moves so far have had major consequences for the industry. Trump's arrival into the Oval Office did see a surge for crypto, but his latest moves are certainly brining about a correction. There is anticipation of a US Bitcoin reserve and on Monday President Trump signed an executive order for the creation of the nation’s sovereign wealth fund. This could potentially see Bitcoin included, but it is yet to be confirmed. While individual States such as Texas and Alaska have their own sovereign wealth funds, the nation as a whole does not.
China meanwhile have announced 10% tariffs on key US exports as trade war intensifies between the globes two strongest economies. It was a swift response by the Chinese and matched the 10% tariff on all Chinese imports into the U.S. The measures by China will include a 15% duty on coal and liquefied natural gas (LNG) and a 10% tariff on crude oil, farm equipment, and select automobiles. These will come into effect on the 10th of February and officials stated that the restrictions were necessary to “safeguard national security interests.”
Have a great day.
Peace. CryptoGod-1.
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