Cryptocurrency Market Reacts to U.S. Trade War Prospects
By Alan Suderman, AP Business Writer
February 3, 2025, 12:06 PM
The cryptocurrency market experienced a notable downturn on Sunday, triggered by the announcement of potential trade tariffs by U.S. President Donald Trump on major trading partners like Canada, Mexico, and China. As a result, several prominent digital assets, including Bitcoin, saw their values plummet by more than 10%.
Bitcoin’s Volatile Weekend
Bitcoin, the leading cryptocurrency by market capitalization, fell below the significant threshold of $100,000 following Trump’s tariffs announcement. On Sunday evening, Bitcoin’s price sank to approximately $92,000 before staging a modest recovery, climbing back to around $99,000 by Monday morning after President Trump indicated a delay in implementing tariffs on Mexican goods.
The drastic drop reflects a broader unease in the financial markets as geopolitical tensions and trade policies come into sharper focus. Crypto markets often react strongly to such external economic pressures, leading to heightened volatility.
Impact on Other Cryptocurrencies
Alongside Bitcoin, other cryptocurrencies such as Ethereum and Dogecoin also faced substantial declines. Independent cryptocurrency analyst Garrick Hileman remarked on the volatility of these digital assets, saying, “Those are riskier cryptos than Bitcoin. But it’s a little surprising how big the gap is.” Many of these digital currencies saw losses exceeding 10% following the tariff announcement.
Notably, Trump’s own meme coin—a digital asset he launched shortly before taking office—also suffered a significant loss. On Monday, it traded around $19, approximately 75% lower than its all-time high achieved shortly after President Trump’s second inauguration. Meanwhile, the First Lady Melania Trump’s new meme coin is experiencing an even steeper decline, currently valued at about $1.50, nearly 90% off its peak.
Market Trends in Response to Geopolitical Tensions
The sell-off in the cryptocurrency market coincided with a global downturn in financial markets, reflecting the uncertainty surrounding Trump’s proposed tariffs. In his recent statements, Trump warned that Americans might experience ‘some pain’ as a result of the tariffs, which he asserted would be “worth the price” to bolster U.S. economic interests. He also hinted at future tariffs on imports from the European Union and potentially the United Kingdom.
The Rise of Cryptocurrencies Amid Political Changes
Bitcoin was launched in 2009 as a decentralized digital currency, free from traditional banking and governmental control. Over the years, cryptocurrencies have transitioned from niche financial instruments to mainstream assets, particularly following Trump’s election. Bitcoin’s recent price movements have often mirrored the performance of tech stocks, reflecting investor sentiment and broader economic conditions.
Despite the recent fluctuations, Bitcoin remains near its all-time high of $109,000, showcasing its resilience in a turbulent economic landscape. Cryptocurrency markets have generally thrived during Trump’s presidency, as he has shifted from skepticism to a more supportive stance on digital assets. His administration has touted ambitions to position the United States as a global leader in cryptocurrency, appointing several crypto-friendly officials to key governmental roles.
As the situation develops, investors are keenly watching market responses to both the trade announcements and the broader economic ramifications these may entail. The future of cryptocurrencies in light of such political decisions remains a topic of considerable interest among economic experts and traders alike.
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