Cryptocurrency Prices Plummet Amid Threat of U.S. Trade War
By Alan Suderman, AP Business Writer
February 3, 2025, 12:06 PM
Cryptocurrency markets experienced significant declines over the weekend following the announcement by U.S. President Donald Trump regarding potential tariffs on imports from Canada, Mexico, and China. The consequences of this trade war loom large, with some of the most prominent digital assets seeing their values dip by over 10%.
Bitcoin Falls Below $100,000
Bitcoin, the world’s leading cryptocurrency, dropped below the psychological threshold of $100,000, falling to approximately $92,000 late Sunday night. However, it managed a slight recovery, climbing to about $99,000 by Monday morning after Trump indicated a pause on tariffs targeted at Mexican goods. This fluctuation reflects the sharp volatility intrinsic to the cryptocurrency market, particularly in response to international economic news.
Broader Market Impact
The impact of Trump’s tariff announcements rippled beyond Bitcoin, affecting a range of cryptocurrencies including Ethereum and dogecoin, which saw substantial declines in value. Specific metrics indicated that several of these digital assets plummeted by more than 10% since the tariff statements were made public. Notably, the bearer of Trump’s own meme coin, launched prior to his presidency, also faced a significant downturn.
Garrick Hileman, an independent cryptocurrency analyst, noted the stark contrast between Bitcoin and other cryptocurrencies in this context. “Those are riskier cryptos than Bitcoin,” he remarked, underscoring how unexpected the extent of the declines in these assets has been.
Financial Markets and Tariffs
The overall sell-off in the cryptocurrency space occurred in parallel with widespread declines in global financial markets, a trend anticipated in response to the potential initiation of these tariffs. Trump has asserted that the U.S. population might experience “some pain” due to the tariffs, framing it as a necessary sacrifice for the broader goal of bolstering American interests. He also stated that similar import taxes were ‘definitely’ on the horizon for the European Union and possibly the United Kingdom.
Meme Coins and Market Sentiment
Amid the volatility, Trump’s meme coin is trading around $19, which represents a staggering 75% drop from its all-time high following its launch coinciding with his second inauguration. Meanwhile, First Lady Melania Trump’s meme coin has seen even more drastic declines, plummeting nearly 90% from its peak, currently valued at approximately $1.50. The reliance of these meme coins on speculative trading underscores the inherent risks within this niche sector of the cryptocurrency market, which often gains traction primarily as part of social media trends despite lacking underlying value.
Trump’s Evolving Stance on Cryptocurrency
Once known for his skepticism regarding digital currencies, Trump has pivoted to become a proponent of cryptocurrencies, recognizing their potential as both a personal investment opportunity and a pivotal aspect of U.S. economic policy. His administration has voiced ambitions of positioning the United States as the global capital of cryptocurrency, appointing several crypto-friendly officials to high-ranking positions.
Although the current fluctuations are unsettling, the cryptocurrency sector has generally seen a substantial increase in value since Trump’s election. Bitcoin prices remain close to their all-time high of $109,000, indicating that the market’s resilience may prevail despite short-term turbulence.
As developments continue to unfold, all eyes will remain on trade negotiations and their potential impact on financial markets, particularly the ever-volatile cryptocurrency landscape.
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