On Sunday, the price of Bitcoin declined sharply following the unexpected announcement from President Donald Trump on imposing new tariffs on key trading partners. The world’s largest cryptocurrency dipped by 7% to $93,768.66. This caused losses for many in the crypto market.
Market Shaken by Fallout Over Tariffs
The selloff began late Saturday after Trump signed an executive order slapping a 25% tariff on imports from Mexico and Canada, along with a 10% duty on Chinese goods. The move triggered immediate volatility across financial markets, with cryptocurrencies reacting as investors braced for economic uncertainty. The CoinDesk 20 index, which tracks the top 20 digital assets by market cap, plunged 19%, while Ether saw a dramatic 20% drop, marking its lowest level since November.
While Bitcoin is a hedge against inflation and economic instability, it is still a risky asset in the short term. This means that heightened uncertainty, particularly from geopolitical or economic disruptions, can send prices lower before long-term trends take hold.
Is Bitcoin’s Drop Temporary?
According to Jeff Park, head of alpha strategies at Bitwise Asset Management, in the short term, Bitcoin is going to suffer, however, it would finally gain if a protracted trade war emerged. “A protracted tariff conflict will undermine the U.S. dollar and drive investors toward alternative assets like Bitcoin,” he explained. That, however, may take a long time in coming as market participants begin to adjust to new economic realities.
Analysts are closely monitoring Bitcoin’s $90,000 support level. If this barrier is broken, some predict a further decline toward $80,000. Despite the current pullback, seasoned traders remain unfazed, noting that Bitcoin corrections of 30% are common even during strong bull markets.
A Broader Impact on Crypto
Outside of Bitcoin, tariffs have caused selling in the rest of the crypto space. Speculative assets continue to lose popularity as investors start to reassess the long-term implications of President Trump’s policies on trade. With around $1.6 trillion in annual trade between the U.S., Canada, Mexico and China, the entire global financial system is preparing itself for the blow.
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As for now, Bitcoin’s price stays volatile, playing in between the risk-off short-term sentiment and the long-term expectations of a weaker dollar. All traders and investors are eagerly waiting to see whether the crypto giant will stabilise or experience another leg down.
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