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Bitcoin (BTC) and the broader cryptocurrency market experienced a significant downturn over the weekend, driven by the fallout from President Trump’s recent announcement of reciprocal tariffs.
This economic strategy has sent shockwaves through global markets, prompting investors to reassess their portfolios in light of rising uncertainty, hence contributing to the broader market sell-off affecting the largest cryptocurrencies.
Trump’s Tariffs Trigger Market Turmoil
Since Trump unveiled a series of tariffs last Wednesday, targeting imports from key trading partners such as Vietnam, Japan, and China, Bitcoin has plummeted by 12%.
The leading cryptocurrency fell to a low of $74,700 within the last 24 hours, effectively erasing gains made after the 2024 presidential election.
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The impact of the tariff announcement has extended beyond Bitcoin, affecting the entire crypto market. Investors are gravitating towards safer assets or exiting financial markets altogether as they brace for potential economic fallout.
On Monday alone, Bitcoin dropped by 4%, while other cryptocurrencies faced even steeper declines: Ethereum (ETH) fell by 10%, XRP by 9%, and Solana (SOL) by 7%.
Collectively, the crypto market has seen a staggering 9% reduction in total market capitalization, shrinking from $2.72 trillion to $2.47 trillion since the tariffs were announced.
Bitcoin Prices Plummet Post-Trump Inauguration
Traditional financial markets are not faring any better. The stock market has also experienced a significant downturn, with both the S&P 500 and Dow Jones Industrial Average down 10% in just five days.
According to a recent report by Fortune, President Trump’s tariffs are expected to disrupt global supply chains, increase inflation, and potentially trigger a recession by raising the prices of foreign goods.
While some industry leaders tout Bitcoin as a hedge against inflation, financial advisors often view it as a risky asset akin to stocks and commodities. This perception has led investors to offload their crypto holdings to mitigate risk in anticipation of economic challenges.
“The decline in crypto markets reflects a broader risk-off sentiment,” said Thomas Perfumo, a global economist at the crypto exchange Kraken. “This isn’t an exodus from crypto, but a macro-driven recalibration.”
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This latest downturn starkly contrasts with the optimism that followed Trump’s election in 2024, during which he promised to support the cryptocurrency sector. This optimism helped propel Bitcoin to an all-time high of $109,000 in January.
However, since his inauguration, digital asset prices have faced significant challenges, largely due to concerns over a slowing economy and the ramifications of a potential trade war.
“There’s a lot of uncertainty right now, and as we’re seeing, crypto is not immune to these global pressures,” remarked Dr. Edward Felten, founder of Offchain Labs, the company behind the Ethereum Layer 2 solution, Arbitrum.
As of now, the largest cryptocurrency has recovered towards the $79,850 mark, just below the key $80,000 line, which has been called one of the major supports for BTC’s price.
Featured image from DALL-E, chart from TradingView.com
