09 Feb 2025

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Donald Trump’s Tariff Wars Shake the Crypto Market

Donald Trump’s Tariff Wars Shake the Crypto Market

Donald Trump’s latest tariff policies have once again made headlines, but this time, their impact extends beyond traditional markets—sending ripples through the cryptocurrency sector.

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The introduction of new tariffs caused Bitcoin to drop below $100,000, triggering concern among investors. However, unlike previous market declines driven by macroeconomic factors, this situation raises a critical question: Is this just a short-term reaction to geopolitical uncertainty, or does it signal a deeper transformation in the crypto market?

New Tariffs and Their Impact

The Trump administration has announced new tariffs, including a 25% levy on imports from Canada and Mexico and a 10% surcharge on Chinese goods. The White House justified these measures as necessary to tighten migration control and protect the U.S. economy. 

This move sparked swift retaliation: 

  • Canada imposed 25% tariffs on U.S. imports.
  • China filed a complaint with the WTO and promised further countermeasures.
  • Mexico introduced a “Plan B” to safeguard its economic interests.

The growing trade tensions rattled global markets, prompting investors to pull funds from risk assets, including cryptocurrencies. As a result, Bitcoin dropped below $100,000 for the first time since January 27, falling to $94,000. 

According to CoinGlass, over $1 billion in leveraged positions were liquidated, leading to significant losses for investors. The hardest-hit traders were those with long positions in TRUMP (-21%), BTC (-12%), ETH (-24%) и SOL (-7%).

Meanwhile, the Fear & Greed Index fell to 44 (Fear). While not yet in extreme fear territory, the decline has already raised concerns among long-term investors.

Fear & Greed Index slips into "Fear" territory – The Coinomist
Fear & Greed Index slips into “Fear” territory. Source: alternative.me

Impact on the Crypto Market: Panic or Opportunity?

Experts are divided on the long-term impact of Trump’s tariff wars on the crypto market. Some believe the market reaction is temporary, while others argue that the situation could ultimately benefit cryptocurrencies.

Dan Gambardello, Founder of Crypto Capital Ventures, remains optimistic, stating that despite the short-term dip, the market will recover quickly. He highlights that institutional investors like BlackRock are steadily increasing their Bitcoin and Ethereum holdings, suggesting that retail panic should not be misleading.

Meanwhile, Jeff Park of Bitwest Invest believes that, in the long run, trade tensions could strengthen Bitcoin’s role as a safe-haven asset.

He believes that market instability could drive more investors toward Bitcoin as an alternative store of value. Historically, economic uncertainty has reinforced Bitcoin’s reputation as “digital gold.”

What’s Next for the Crypto Market?

The crypto market remains highly reactive to macroeconomic shifts. If financial tensions continue to rise, the top five cryptocurrencies by market capitalization could either decline, as investors move toward safer, more traditional assets, or strengthen, if crypto is perceived as a hedge against economic instability.

In recent years, Bitcoin has already withstood global crises and geopolitical conflicts. Its response to the tariff wars will serve as another key test of its resilience. If investors start viewing crypto as more than just a speculative asset, but rather as a safe-haven investment, the market could emerge stronger than ever from this economic uncertainty.

The content on The Coinomist is for informational purposes only and should not be interpreted as financial advice. While we strive to provide accurate and up-to-date information, we do not guarantee the accuracy, completeness, or reliability of any content. Neither we accept liability for any errors or omissions in the information provided or for any financial losses incurred as a result of relying on this information. Actions based on this content are at your own risk. Always do your own research and consult a professional. See our Terms, Privacy Policy, and Disclaimers for more details.

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