Bitcoin and Ether, two of the most popular cryptocurrencies, experienced significant market drops on Monday as global trade tensions escalated. The price of Bitcoin plummeted to its lowest point in three weeks, reaching $92,580 during early Asian trading before falling further to $93,727.53. Ether also saw a major dip, dropping 24% to hit $2,300, its lowest level since September.
The market downturn was triggered by President Donald Trump’s announcement of new trade tariffs, including 25% duties on Canadian and Mexican imports and 10% duties on Chinese products starting the following day. These tariffs, affecting nations with which the United States conducts annual trades exceeding $1.6 trillion, prompted retaliatory measures from Canada, Mexico, and China, leading to increased investor uncertainty.
Chris Weston from Pepperstone explained that during times of uncertainty, crypto markets often function as a “risk proxy.” The ongoing trade conflict between nations has created economic uncertainties surrounding price inflation, corporate financial performance, and overall market expansion. Following Trump’s tariff announcement, the crypto market saw $1.79 billion in liquidations within 24 hours, with over 450,000 traders being liquidated. Long positions accounted for $1.57 billion, while short positions totaled $219 million.
Bitcoin had reached its highest value at $107,071.86 on January 20, following Trump’s election victory, as investors anticipated favorable new crypto regulations. However, the slow pace of regulatory changes has disappointed investors. Despite the recent drop in prices, many investors still view Bitcoin as a hedge against inflation and instability. Financial experts are closely monitoring Bitcoin’s position at the $90,000 mark, as the long-term market outlook depends on global economic conditions and trade conflicts.
While a price fall could potentially trigger further market losses, the resilience of Bitcoin as a safe haven asset remains a key consideration for investors. The current market volatility underscores the interconnectedness of cryptocurrency prices with global economic events and geopolitical tensions. As the trade dispute continues to unfold, the crypto market is likely to remain sensitive to external factors impacting investor sentiment and market dynamics.