The cryptocurrency market experienced a significant downturn on Monday, driven by fears of an escalating trade war. Bitcoin, the largest digital asset, plummeted to a three-week low of $91,441.89 overnight before recovering slightly to $95,730.35 at 0941 GMT, marking a 6.2% decline for the day. Meanwhile, ether, the second-largest cryptocurrency, nosedived nearly 25% since Friday, hitting $2,592.14 in its worst three-day slump since November 2022.
This selloff was triggered by U.S. President Donald Trump’s announcement of new tariffs—25% on imports from Mexico and Canada, and 10% on Chinese goods—set to take effect on Tuesday. In response, Canada and Mexico, the United States’ primary trading partners, pledged retaliatory measures, while China vowed to challenge the tariffs at the World Trade Organization (WTO).
Broader crypto markets suffered, with nearly a quarter of the top 100 cryptocurrencies shedding more than 20% of their value in the past 24 hours, according to CoinGecko. Shares of the U.S.-based crypto exchange Coinbase slid 5.5% in pre-market trading. Additionally, Trump’s cryptocurrency, $TRUMP, which had surged earlier in the year, dropped below $20 after reaching highs above $73 in January.
As cryptocurrencies trade continuously, they have become increasingly reactive to macroeconomic news. Investors worry that higher tariffs could slow economic growth, reduce corporate earnings, and drive inflation. “Crypto often acts as a risk proxy during volatile times, particularly on weekends when traditional markets are closed,” explained Chris Weston, head of research at Pepperstone.
Bitcoin outperformed ether during the market downturn, as some investors view it as a safer asset akin to gold. Ether, on the other hand, is easier to liquidate, making it more susceptible to sharp declines. “The entire market is experiencing losses, but bitcoin has shown relative resilience,” noted Joseph Edwards, head of research at Enigma Securities.
The crypto decline follows a post-election rally, during which bitcoin surged 40% since Trump’s victory in November, driven by hopes for crypto-friendly policies. Despite Trump’s past skepticism of cryptocurrencies, his administration has formed a working group to explore regulatory frameworks and the potential development of a national crypto reserve.
However, expectations for swift regulatory changes have faded. While some had anticipated the U.S. government might invest in bitcoin, those hopes have yet to materialize. “Despite short-term volatility, the longer-term outlook for crypto remains promising under a more favorable U.S. administration,” said Paul Howard, senior director at Wincent, a crypto market-maker.
