crypto

Bitcoin Drops to 3-Week Low as Trump Tariffs Rattle Markets

By Carl Vogel

Cryptocurrency prices experienced a significant decline on Monday, with Bitcoin hitting a three-week low amid investor concerns about a potential trade war. Bitcoin, the leading cryptocurrency, fell to a low of $91,441.89 overnight and was trading at $95,730.35, reflecting a 6.2% drop for the day. Currently, Bitcoin’s price is reported at $98,127.15, down approximately 3.29% from the previous close. The market’s volatility reflects broader financial uncertainties as geopolitical tensions influence investor sentiment across various asset classes.

Why Bitcoin Price Drops?

President Donald Trump of the United States levied 25% tariffs on Mexcian and most Canadian imports over the weekend and 10% on Chinese goods beginning on Tuesday. China said it would contest Trump’s tariffs at the World Trade Organization, while the United States’ two largest trading partners, Canada and Mexico, swiftly pledged punitive actions. 

According to CoinGecko data, about 25% of the top 100 cryptocurrencies have seen a 20% or more decline in value in the past day. In pre-market trading, shares of Coinbase, a cryptocurrency exchange based in the United States, fell 5.5% CoinGecko reports that Trump’s cryptocurrency, $TRUMP, fell below $20. The cryptocurrency was first introduced just before Trump was sworn in, and on January 19, it hit highs of almost $73.

Cryptocurrencies have recently been responsive to the general mood of the markets and trade all day, including on weekends. Investors are concerned that tariffs may be inflationary and negatively impact company earnings and growth. 

Following a robust gain following Trump’s election, cryptocurrency is now facing additional negative pressure as some investors are dissatisfied with the lack of prompt action to support the industry or relax rules since he took office. In anticipation of crypto-friendly rules from the Trump administration, Bitcoin has risen 40% since the election in early November and reached a record high of $107,071.86 on January 20, the day Trump was sworn in as the 47th President of the United States.

During his campaign, Trump, who had called cryptocurrency a fraud, welcomed digital assets and pledged to turn the US into the ‘crypto capital of the planet.’ Trump established a working group on cryptocurrencies a few days after taking office, with the goal of establishing a national cryptocurrency stockpile and suggesting new rules for digital assets. 

According to Paul Howard, senior director at cryptocurrency market maker Wincent, some of Trump’s actions have not lived up to the expectations of cryptocurrency bulls, who had thought that the government would declare its intention to purchase Bitcoin.

Other Cryptocurrencies that Experienced Significant Price Drops

Apart from Bitcoin, many other popular cryptocurrencies have experienced significant price drops?

The second-largest cryptocurrency by market cap, Ethereum (ETH), has experienced a sharp price drop. Its price fell from $3,200 on Saturday night to $2,326, its lowest since September of last year. This significant decline highlights how vulnerable the entire market is to rising trade tensions. 

Not all well-known cryptocurrencies were exempt. Ripple-affiliated cryptocurrency XRP had a sharp decline, dropping from $2.99 on Saturday night to $1.9 today. Among the leading cryptocurrencies, this drop places XRP among the worst-performing assets. 

Known for its high-performance blockchain capabilities, Solana (SOL) also encountered difficulties. After tariffs were imposed, the price of the cryptocurrency dropped from about $226 to $183, which helped the market as a whole. This illustrates how the declared tariffs have affected a wide range of digital assets.   

Trump and first lady Melania Trump’s recently introduced meme coins, which are already in decline, fell even more. Melania coin dropped from $1.71 to $1.34, while the Trump joke currency dropped from about $23 to $17 on Saturday.

The digital currency market, renowned for its inherent volatility, has been particularly sensitive to such macroeconomic developments. This represents the interconnectedness of global economic policies and the cryptocurrency landscape.

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