U.S. President Donald Trump’s recent decision to impose tariffs on trading partners Canada, Mexico, and China has sent markets into a tailspin, triggering significant sell-offs and uncertainty in the crypto sector. Bitcoin saw a significant decline, falling below the $100,000 mark, while altcoins like XRP and Cardano’s ADA reported losses of over 17% and 22% respectively. This turmoil has also impacted Trump’s World Liberty Financial portfolio, which reportedly experienced a loss exceeding 20%.
The broader market liquidation, estimated by Bybit’s co-founder and CEO Ben Zhou, ranges between $8 billion and $10 billion, with Bybit alone observing a 24-hour liquidation of $2.1 billion. As Trump plans further tariffs, including those on the European Union and various industries like superconductors and energy, analysts express concern about increased market instability and its potential adverse impacts on crypto prices. Many suggest Bitcoin is currently acting as a risk-on asset, vulnerable to market volatility.
Crypto influencer Amit Kukreja highlighted Bitcoin’s dependence on liquidity, which tariffs are likely to diminish. Economist Alex Krüger reinforced this sentiment, describing the tariffs as detrimental to risk assets and subsequently the economy. He suggests the best outcome would be for countries affected by the tariffs to refrain from severe retaliatory measures and for the U.S. to quickly reach resolutions.
Opinions diverge on Bitcoin’s future trajectory. Some enthusiasts advocate for buying into the dip, while others, such as Jeff Park from Bitwise Invest, foresee that Bitcoin might rise significantly if the ongoing financial instability continues. He argues that Trump’s actions could be a strategic move towards a wider economic agreement akin to a modern Plaza Accord.
Despite the prevailing uncertainty, Krüger points to potential upsides for Bitcoin, including potential tax cuts and deregulation within the U.S. crypto industry. He maintains that while the market remains unpredictable, opportunities for growth remain, although investors should exercise caution given the uncertain landscape. Meanwhile, Trump has acknowledged the potential for short-term economic challenges while maintaining that his primary goal is to rectify longstanding trade imbalances. His stance reflects a belief that, despite potential adversity, the long-term benefits will outweigh the immediate drawbacks for the U.S. economy.
