Crypto traders cut their stakes in a variety of coins in response to US President Donald Trump's announcement of tariffs over the weekend.
According to data published by Bloomberg, ether, the second-largest digital asset by market value, dropped as much as 27% to $2,135 on Monday AM in Asia before reversing losses. In percentage terms, it was the biggest intraday drop for the coin since May 2021.
Trump's tariffs run the danger of upsetting international trade and are anticipated to apply to items worth billions of dollars that the US imports from Canada and Mexico. Additionally, Trump intensified his threats to levy tariffs on the European Union.
Other cryptocurrencies were affected by the market's pessimism; Bitcoin was down around 6% at one point, while smaller tokens saw much more severe losses.
Source: Bloomberg
"The entire market is being impacted by Trump's tariff war," stated Caroline Bowler, CEO of BTC Markets. "Apprehensions regarding trade wars and stagflation, which can lead to recessions, are spreading to Bitcoin and other alt coins."
The fluctuations in the cryptocurrency market signify a dramatic reversal of previous gains that can be attributed to Trump's pro-crypto remarks throughout the campaign and following his election. On January 24, the Republican signed an executive order establishing a working group tasked with producing clear regulations for US cryptocurrency companies in six months. Examining the establishment of a cryptocurrency stockpile is another task assigned to the group.
According to Jonathan Yark, a senior quant trader at market maker Acheron Trading, "Ether is being beaten more than Bitcoin, Solana, and Ripple primarily because there is an expectation that the latter are likely to be included in a digital asset stockpile in the US as American-led companies." "Ether's liquidity is therefore much less stable and more prone to volatility."
Sean McNulty, head of APAC derivatives at digital-asset prime brokerage FalconX, stated that despite optimism regarding Trump's goals, his tariff announcements over the weekend "saw a strong bid for downside on Saturday and Sunday as hedges on larger global macro ramifications." He also noted that Bitcoin is now handling the selloff better than smaller, more speculative tokens.
According to Coinglass statistics, more than $1 billion worth of bullish cryptocurrency contracts were liquidated in the futures markets early on Monday in Asia, with Ether bets suffering the most. Since December 9, that is the most in a single day.
According to Sean Dawson, head of research at cryptocurrency trading platform Derive.xyz, "the risk of a protracted trade war with China, in addition to US allies, does not bode well for the volatile and rate dependent digital asset space." With options markets "giving a 25% chance ETH hits $2,000 before the end of the month," he continued, Ether might find support between $1,900 and $2,000.
Bitcoin was trading around $93,000 and Ether at about $2,500 as of early afternoon in Singapore, while XRP, which is associated with Ripple, was down 17% at $2.20.
According to CoinGecko data, the whole value of the cryptocurrency market fell by over $360 billion on Monday. The memecoins that Trump and his wife Melania had introduced in recent weeks also fell, selling roughly 75% and 90% below their respective peaks.