Bitcoin and Cryptocurrency Markets Decline Amid Trump Tariff Announcement
April 3, 2025, 08:50 AM IST
By The Economic Times
Bitcoin, the largest cryptocurrency by market cap, experienced a significant drop of 4% following the announcement of new tariffs imposed by President Donald Trump on US trading partners. The decline underscores the ongoing volatility of cryptocurrencies, especially in response to geopolitical and economic uncertainties.
The Impact of Tariffs on Crypto Markets
In early trading on Thursday in Singapore, Bitcoin fell to around $82,000 before recovering slightly. Other major cryptocurrencies also saw declines, with Ethereum and XRP following suit, and Solana even suffering a loss of over 9% at one point. This downturn in the markets is attributed to tariffs that Trump announced will be a minimum of 10% on all exporters to the United States and additional duties on about 60 countries identified to have substantial trade imbalances with the US. Notably, China is set to face a 34% tariff, while the European Union and Japan will incur rates of 20% and 24% respectively.
Market Response to Tariff Announcement
Initially, cryptocurrencies seemed to weather the tariff news relatively well. However, as traders began to assess the broader implications, prices began to slip. John Wu, president at Ava Labs, noted, “As a risk-on asset, cryptocurrencies have generally traded poorly during periods of uncertainty following announcements such as steady high rates or the introduction of trade tariffs.” This sentiment reflects a broader apprehension among investors regarding the unpredictability that such tariffs could introduce into global markets.
Broader Financial Market Effects
The volatility in cryptocurrencies coincided with a broader decline in risk assets, resulting in a nearly 2.5% drop in a widely held $577 billion exchange-traded fund tracking the S&P 500 (SPY) shortly after the US market closed on Wednesday. Market analysts expect further fluctuations in the markets in the near term, not necessarily because of the tariffs themselves, but due to the uncertainties they represent.
Ben Kurland, CEO of crypto research platform DYOR, observed, “Traders hate unpredictability, and this signals more is coming.” Such sentiments are leaving investors wary as they navigate potential risks in both cryptocurrency markets and traditional equities.
Gold Shines Amidst Market Turbulence
In contrast to the struggles of cryptocurrencies, gold has solidified its position as a safe haven asset, reaching a record price of nearly $3,160 per ounce on Thursday. This reflects a strong divergence in asset performance during times of economic uncertainty, with bullion remaining one of the few commodities exempt from the new tariffs.
Rachael Lucas, a crypto analyst at BTC Markets, stated, “The next big move hinges on geopolitics, policy shifts, and whether traders see Bitcoin as risk or refuge.” She also emphasized that maintaining the $80,000 level for Bitcoin will be critical in the coming days, suggesting that market participants are closely watching this threshold.
Conclusion
As the geopolitical landscape evolves with the introduction of new trade policies, the cryptocurrency market remains sensitive to such developments. Investors are advised to stay informed and cautious as prices react to ongoing uncertainties. The interaction between traditional markets and digital assets will likely continue to shape investment strategies moving forward.
For further updates on Bitcoin and cryptocurrency markets, stay connected with ETMarkets.
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