Cryptocurrency prices declined significantly on Monday, with Bitcoin reaching a three-week low at $94,476.18 and briefly dropping to $91,441.89.
Ether also experienced a sharp 24% decline, falling to $2,494.33, marking its lowest since early September.
The decline in the market follows the recent imposition of tariffs by U.S. President Donald Trump. Over the weekend, Trump announced a 25% tariff on imports from Mexico and Canada and a 10% tariff on Chinese goods, which will take effect on Tuesday. This decision has heightened tensions, as Canada and Mexico have pledged to retaliate, while China has indicated its plans to challenge the tariffs at the World Trade Organization. In light of the increasing uncertainty regarding global growth and inflation, investors seek safer investments, resulting in a significant sell-off in cryptocurrencies.
This market shift coincides with broader unease surrounding Trump’s policies. Bitcoin, which reached a record high of $107,071.86 on January 20 following Trump’s inauguration, has faced downward pressure. Despite campaign promises to make the U.S. the “crypto capital of the planet” and establish a cryptocurrency working group, many investors have expressed disappointment at the sector’s lack of immediate regulatory support.
As crypto markets trade 24/7, they have become susceptible to geopolitical tensions, with recent tariff news spurring investors to retreat to more traditional, stable assets. Chris Weston, Head of Research at Pepperstone, noted,
“Cryptocurrency has become a risk barometer, reacting sharply to such developments, particularly over weekends.”
Notably, Matt Hougan, Chief Investment Officer at Bitwise, views Trump’s executive order on cryptocurrency as a potential disruptor to the traditional boom-and-bust cycle. He believes the January 23 order could significantly enhance mainstream crypto adoption by encouraging banks and Wall Street institutions to engage more actively. While he anticipates the continuation of market cycles, he predicts future downturns will be shorter and less severe due to increased market maturity and the presence of long-term investors.
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