Trump’s Trade War Sends Shockwaves Through Crypto Markets
Cryptocurrency markets have taken a sharp downturn following President Donald Trump’s announcement of new tariffs on key trade partners. Bitcoin fell to a three-week low, dipping below $93,000, while Ether dropped to levels not seen since September. The broader crypto market saw billions wiped out in liquidations, underscoring the sector’s growing sensitivity to global economic policies.
Trump’s Tariffs Trigger Market Panic
Over the weekend, Trump imposed a 25% tariff on Mexican and most Canadian imports and a 10% tariff on Chinese goods, a move that immediately rattled global markets. Both Canada and Mexico vowed to retaliate, while China announced it would challenge the tariffs at the World Trade Organization. Amid the uncertainty, investors fled riskier assets—including cryptocurrencies—resulting in over $2 billion in crypto liquidations within 24 hours.
Bitcoin, which hit an all-time high of $107,071 on January 20, the day of Trump’s inauguration, tumbled to $91,441before rebounding slightly. Ether saw an even steeper decline, losing 24% of its value in a matter of hours.
Crypto Market’s Growing Link to Traditional Finance
Industry experts note that cryptocurrency markets are increasingly influenced by macroeconomic factors. Caroline Bowler, CEO of BTC Markets, pointed out that crypto’s strong correlation with traditional markets has deepened under Trump’s administration.
“The impacts of Trump’s tariffs are equally being felt in crypto markets,” Bowler said. “While traditional safe-haven assets like gold are benefiting from the uncertainty, Bitcoin and other cryptocurrencies are facing downward pressure.”
Gold, in contrast, hit a new all-time high of $2,483 per ounce, further decoupling from Bitcoin, which has often been considered a digital equivalent to the precious metal. Analysts say that while Bitcoin is frequently touted as a long-term store of value, its volatility in the face of economic instability makes it behave more like a speculative asset than a safe-haven investment.
Investor Sentiment: Panic or Opportunity?
While the downturn has many investors worried, some see it as an opportunity. Financial commentator Robert Kiyosakideclared on social media that the market crash was “the best time to get rich,” urging investors to buy assets at a discount. Meanwhile, digital wealth analyst Sydel Sierra advised investors to “zoom out” and take a long-term perspective, viewing this as a temporary pullback rather than a full-blown collapse.
A Turning Point for Bitcoin Under Trump?
Trump’s relationship with cryptocurrency has evolved significantly. Once a critic who dismissed Bitcoin as a scam, he later embraced the industry, promising to make the U.S. the “crypto capital of the planet.” However, some investors are growing impatient, as his administration has yet to implement concrete regulatory changes that Favor crypto adoption.
The uncertainty surrounding U.S. crypto policy, coupled with broader economic turmoil, has left the industry at a crossroads. While Trump’s sovereign wealth fund executive order has fuelled speculation about government Bitcoin acquisitions, the immediate impact of his trade war has been far less favourable for the crypto market.
What’s Next?
With tariffs now in place, markets will be watching closely for potential retaliatory measures from trade partners. Trump has hinted that the European Union could be his next target, adding further uncertainty.
For crypto investors, the coming weeks will be critical. Will Bitcoin regain its footing as a store of value, or will it continue behaving like a risk asset tied to traditional markets? As the global economic landscape shifts, the answer to that question may define Bitcoin’s role in the financial system for years to come.
