Bitcoin and ether took a sharp hit on Monday as new U.S. tariffs fueled global trade worries. Bitcoin dropped to USD94,476.18 during early Asian trading, reaching a three-week low of USD91,441.89. Ether also plunged 24 percent, falling to USD2,494.33, marking its lowest point since early September.
The downturn continued into Sunday, with bitcoin falling 7 percent to USD93,768.66, according to Coin Metrics. The CoinDesk 20 index, which tracks the largest cryptocurrencies, fell 19 percent, while ether dropped 20 percent, hitting its lowest since November.
Trump’s Tariffs Trigger Market Jitters
Over the weekend, former President Donald Trump announced hefty tariffs: 25 percent on imports from Canada and Mexico, and 10 percent on Chinese goods, effective Tuesday. The U.S. trades around USD1.6 trillion annually with these countries.
In response, Canada and Mexico, two of America’s top trading partners, vowed to impose their own tariffs. China, on the other hand, stated it would challenge the tariffs at the World Trade Organization.
Investor Concerns and Market Reactions
"Crypto is really the only way to express risk over the weekend, and on news like this, crypto becomes a risk proxy," said Chris Weston, head of research at Pepperstone, in an interview with CNBC. Investors fear that ongoing trade conflicts could slow economic growth, hurt corporate profits, and drive up inflation.
Bitcoin had previously soared to a record high of USD107,071.86 on January 20, the day of Trump’s inauguration as the 47th U.S. President. It had risen 40 percent since the November election, driven by hopes that Trump’s administration would roll out crypto-friendly policies. During his campaign, Trump promised to make the U.S. the "crypto capital of the planet."
Regulatory Hopes and Disappointments
Despite initial excitement after Trump’s election, many investors are now disappointed by the slow pace of regulatory changes. Just last month, Trump ordered the creation of a cryptocurrency working group to suggest new regulations and explore a national crypto reserve.
Jeff Park, head of alpha strategies at Bitwise Asset Management, shared his thoughts on the long-term effects of the trade war. "A prolonged tariff war could actually benefit bitcoin in the long run as it may weaken the dollar and U.S. interest rates," he said.
What’s Next for Bitcoin?
Analysts are keeping a close eye on bitcoin’s USD90,000 support level. If it drops below this mark, it could slip further toward USD80,000. Historically, bitcoin has seen price corrections of about 30 percent during bull markets.
While bitcoin’s short-term outlook remains uncertain, many still see it as a hedge against inflation and economic turmoil. However, its immediate direction will likely depend on how global markets and political events unfold.