Cryptocurrency Bitcoin Sinks to $75,000 Due to Trump's Tariffs Being Implemented on Chinese Products
Here's a quick rundown of the crypto market's recent tumble, all thanks to President Trump's global tariffs.
The Big Drop
Bitcoin took a nose dive, plunging to nearly $75,000 early Wednesday as President Donald Trump's aggressive trade policies kicked in, setting off a broad sell-off in the crypto market. Ethereum followed suit, tumbling 10%, leading the pack of major tokens. The total crypto market cap slumped by 6%, extending a 7-day slide that's almost 15%.
Pain for the Small Players
Smaller tokens bore the brunt of the damage. Trendy coin Berachain's BERA plummeted 20%, while popular meme coins like Bonk, Pepe, and Floki suffered losses exceeding 9%. Even major altcoins weren't spared, with Dogecoin down by 16.3%, Solana losing 18%, and Cardano falling a whopping 23.7% over the past week.
Tariffs: The New Trump Card?
Bitcoin has lost approximately 30% of its value since January when it peaked at $109,000, just before Trump's inauguration. The current price is a far cry from the all-time highs reached earlier this year.
The crisis started when tariffs on Chinese goods were hiked to 104%, along with import taxes on over 60 other trading partners. These measures, effective past midnight Tuesday, mark a significant escalation in trade tensions between the world's largest economies.
The Crypto Casualties
Trade wars ignite economic uncertainty, causing investors to bail on high-risk assets like cryptocurrencies, which can lead to market volatility. Additionally, higher interest rates can make borrowing costlier, dampening demand for cryptocurrencies and reducing the appeal of risky investments.
Are There Silver Linings?
Even though the market is down, some analysts see a glimmer of hope. "The temporary dip presents a buying opportunity for long-term investors," says Ryan Lee, Chief Analyst at Bitget Research. He suggests dollar-cost averaging into Bitcoin with an eye on altcoins like Solana for potential upside later. Lee remains optimistic about a recovery to peak prices by late 2025.
Bitcoin as a Safe Haven?
The economic uncertainties have revived talks about Bitcoin's potential as a safe haven. America's faith in the U.S. dollar is eroding, with other currencies seen as "weaker," says Bitwise Invest head of alpha strategies Jeff Parks. Gold, often viewed as a safe harbor, has drawbacks due to shipping and storage issues.
What's Next?
The U.S. dollar index is currently trading at 102.193, down 5.84% since the start of the year. As the trade tensions unfold, the focus is on how quickly the U.S. can strike new trade deals with its partners.
"We've entered a new era of protectionism, and what's worrying is we still have no more clarity on where it's all going to settle," says Swyftx Lead Market Analyst Pav Hundal.
[1] https://www.coindesk.com/trump-tariff-policy-impacts-cryptocurrencies[2] https://www.investopedia.com/terms/t/trade-war.asp[3] https://www.cnbc.com/2021/01/05/heres-where-the-us-will-get-hit-hardest-from-trumps-tariffs-on-china.html[4] https://www.wsj.com/articles/u-s-imposes-tariffs-on-china-2018-03-22[5] https://www.zerohedge.com/markets/chinese-media-says-trump-offered-us-china-trade-deal-details
Cryptocurrency investing, particularly in Bitcoin, has become challenging due to the impact of President Trump's trade policies on the market. The escalation of trade tensions, leading to higher tariffs, has caused a dip in the crypto market, with Bitcoin plunging near $75,000 and other altcoins suffering significant losses. As the trade wars create economic uncertainty, investors are increasingly wary of high-risk assets like cryptocurrencies, leading to potential market volatility.
