Bitcoin on the swing: Trump's tariffs are causing turbulence in the crypto market

Bitcoin on the swing: Trump's tariffs are causing turbulence in the crypto market

Cryptocurrencies are back on an upward trajectory after a recent short-term slump, thanks to US President Donald Trump's announcement of new tariffs on aluminium and steel. The move is part of an escalating trade war between the United States and other countries and has sparked immediate reactions in financial markets.

On 9 February, Trump declared that all steel and aluminium imported into the US would be saddled with a 25% tariff. "If they're charging us 130% and we're charging them nothing, it's not going to stay that way," the president said, adding that the White House has also imposed reciprocal tariffs on countries that impose import taxes on US goods.

Immediately following the announcement, crypto markets saw a significant drop. Bitcoin, which plunged after the news, soon began to recover, however. According to data from CoinMarketCap, the price of bitcoin fell, but then returned to a stable level. Ether, another major cryptocurrency, also recovered to near its previous levels after reaching a low of $2,537, eventually climbing to $2,645.The total market capitalization of cryptocurrencies initially fell from $3.15 trillion to $3.10 trillion, but gradually returned to $3.13 trillion. The Crypto Fear & Greed Index, an indicator that tracks market sentiment, has been in fear territory for the past week with an average score of 44 out of 100. The latest update on February 10 showed a drop to a score of 43, reflecting investor nervousness.

Trump's tariff announcement also touched on other areas, including plans to impose tariffs on the European Union, superconductors, oil, gas, steel and copper. Already on February 1, the president imposed tariffs of 25% on major trading partners such as Canada and Mexico, and 10% on China, leading to declines in both stock and crypto markets.

Estimates of losses vary, but Bybit's co-founder and CEO, Ben Zhou, speculated that liquidation could have reached $8 billion to $10 billion. However, the crypto market eventually stabilized after the announcement that planned tariffs on Mexico and Canada would be suspended for 30 days. Even so, Trump hinted that the tariffs could be reinstated after that period.

The current situation shows how sensitive cryptocurrency markets are to political decisions and trade strategies. Investors should be cautious and monitor developments not only in the crypto world but also in the field of international trade.

*This is not an investment recommendation.

Coingarage team