Bitcoin experienced a significant drop on Monday, reflecting a broader downturn in cryptocurrency prices as risk appetite was hit by former U.S. President Donald Trump imposing trade tariffs on China, Canada, and Mexico.
Losses in the crypto market followed an over 1.5% slump in Wall Street futures, as traders braced for a renewed trade war. Trump announced a 25% import duty on Canada and Mexico and a 10% tariff on China, prompting all three nations to vow retaliation. This heightened uncertainty and weighed heavily on investor sentiment.
Bitcoin fell as much as 10% to $91,695.8, while Ether, the world’s second-largest cryptocurrency, dropped 22.7% to $2,434.84. Additionally, $TRUMP—a memecoin launched by the former President in January—slid over 15% to a record low of $16.349.
Despite the prospect of friendlier crypto regulations under Trump, his recent executive order calling for a comprehensive regulatory framework for digital assets failed to generate enthusiasm in the markets. Concerns over heightened trade tensions and inflationary pressures overshadowed any potential policy benefits for the crypto sector.
Trump’s trade tariffs sparked a broad risk-off move across global financial markets, strengthening the U.S. dollar to a near one-month peak. While traditional safe-haven assets like gold saw some bids, the dollar remained the primary beneficiary of capital flows.
Analysts cautioned that Trump’s aggressive tariff strategy could drive up inflation by increasing import costs, thereby weakening U.S. economic growth. Additionally, rising inflation concerns may limit the Federal Reserve's ability to implement interest rate cuts in the near term, further dampening risk assets, including cryptocurrencies.
As market participants digest the implications of these tariffs, volatility is expected to persist, with Bitcoin and other cryptocurrencies likely to react to further geopolitical and economic developments.
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