The cryptocurrency market, which saw a significant increase after Donald Trump’s election win in early November, has certainly taken a turn for the worse. A fresh wave of selling, caused by the effects of the U.S. president’s recently put in place tariffs, has almost entirely eliminated those profits, leaving a large portion of investors stunned.
The Trump Bump: A Fleeting Moment
Soaring prices in the cryptocurrency market after Trump’s election can be partially attributed to his promotional advocacy around the asset class. Many investors thought that his victory would be greatly beneficial for the future of cryptocurrencies, and, in fact, their expectations were a lot more positive in relation to regulatory policies. Ultimately, that optimism was proven wrong.
Tariff Fallout: A Global Market Jolt
The sweeping tariffs placed on an entire new collection of products by President Trump have caused substantial harm to crypto markets and have undeniably impacted other global markets as well. All the uncertainty and volatility caused by the new tariffs has resulted in a drastic sell-off, which eliminates the growth that was achieved over the past few months.
Bitcoin Slumps: A Leading Market Signal
As we all know, the price of Bitcoin, the foremost cryptocurrency, served as a keystone indicator of the market’s decline. On Monday, as speculated during the bullish Sonntag Night Futures, Bitcoin momentarily dropped under $75,000, its lowest mark since November 7 (i.e., the Trump Wave). Prices tumbled 5.3% at one point during the trading day before observing a slight recovery.
Bloodbath of Altcoins: Major Drop throughout Market
Even as Bitcoin suffered a hefty loss, smaller digital coins known as altcoins faced even more loss. XRP, Solana, and Cardano, three notable altcoins, were all trading down from 5 to 10 percent. Widespread decline of this nature further showcases the fragile state of the broader crypto market with regard to external economic factors.
Ether’s Reduction: Lowest in Several Months
Ether, the second largest cryptocurrency in terms of market cap, by a considerable margin also recorded a strong loss, trading at the lowest level since March 2023. Marking this level as a multi-month low indicates the level to which the market contraction has extended and the selloff due to tariffs has deepened in the crypto market.
Diego Zuluaga—A Volatile Asset Class: Reacting to Global Events
The inherent instability of the asset class is underscored by the swift reversal in the cryptocurrency market. Unlike financial markets, which might trade within a band of influences, the crypto market is particularly reactive to global happenings and policy shifts. In this light, Trump’s tariff announcement served as a remarkable driver in the recent sell-off.
The Uncertainty Ahead: A Market in Flux
What is clear is that the current state of the cryptocurrency market is still unresolved. How long the tariff wreckage will linger and how low prices may drop for investors to sustain the unwanted volatility are uncertain. The downturn also reminds investors of the risks that come with such investments, considering this is still a new asset class and its highly speculative nature inherently invites volatility.
