The announcement of new tariffs by US President Donald Trump has caused a significant downturn in financial markets, including cryptocurrencies. Bitcoin plummeted to $92,000, marking its lowest level since early January, while cryptocurrency derivatives trading platforms liquidated over $2 billion worth of positions, as per Coinglass data.
The tariffs, which Trump revealed on Saturday, include a 25% duty on imports from Canada and Mexico, and a 10% tariff on goods from China. These measures are set to take effect on Tuesday.
Trump justified the tariffs as part of a broader effort to enhance border security and tackle the opioid crisis, particularly the trafficking of fentanyl.
However, economists have raised concerns about the potential impact of these tariffs on both the US and global economies. They warn that these measures could lead to increased consumer prices, rising inflation, and the possibility of a trade war that may disrupt global supply chains and result in job losses.
Cryptocurrencies have been negatively impacted by these developments. Ethereum dropped by 24%, reaching $2,300, with traders incurring losses of $528 million within 24 hours. Bitcoin traders also faced significant losses of $421 million due to liquidation events.
Other cryptocurrencies, including XRP, DOGE, and ADA, saw losses exceeding 30%, while SOL and BNB both dropped by 15%. These declines contributed to an overall 8% reduction in the total cryptocurrency market capitalization.
Despite these losses, some analysts believe that the new tariffs might drive demand for Bitcoin as a hedge against inflation. Jeff Park, Head of Alpha Strategy at Bitwise Asset Management, suggested that Trump’s policies could create an environment where Bitcoin thrives, especially if they result in a weakened dollar and increased pressure on the global economy.
