Over the weekend, US President Donald Trump imposed 25% tariffs on Mexican and most Canadian imports, and 10% on goods from China, starting on Tuesday.
Canada and Mexico, the top two US trading partners, immediately vowed retaliatory measures, and China said it would challenge Trump’s levies at the World Trade Organisation.
Almost a quarter of the 100 largest cryptocurrencies have lost 20% or more in value over the last 24 hours, according to CoinGecko data.
Shares in U.S. crypto exchange Coinbase were down 5.5% in pre-market trading.
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Trump’s own cryptocurrency $TRUMP slid below $20, according to CoinGecko. Launched shortly before Trump’s inauguration, the cryptocurrency had initially surged, reaching highs above $73 on Jan. 19. Cryptocurrencies trade around the clock, including at weekends, and have lately been sensitive to markets’ broader sentiment. Investors worry that tariffs can hurt growth and company earnings as well as be inflationary.
“Crypto is really the only way to express risk over the weekend, and on news like this crypto resorts to a risk proxy,” said Chris Weston, head of research at Pepperstone.
Bitcoin has fallen less sharply than ether partly because some buyers consider it a “risk-off asset” like gold, and partly because it is easier to sell ether quickly at times of market stress, according to Joseph Edwards, head of research at Enigma Securities.
“What we’ve been seeing isn’t so much that ether is being uniquely hard-hit (most of the market is down similarly or worse) but rather that bitcoin is holding up uniquely well,” Edwards said.
Disappointment
There is added downward pressure on crypto after a strong rally in the wake of Trump’s election, as some investors have felt disappointed at the lack of immediate moves to boost crypto or loosen regulations since he took office.
Bitcoin touched a record high of $107,071.86 on Jan. 20, when Trump was sworn in as the 47th U.S. President and is up 40% since the election in early November in the hopes of crypto-friendly regulations from the Trump administration.
Trump – who once labelled crypto a scam – embraced digital assets during his campaign, promising to make the United States the “crypto capital of the planet.”
Days after becoming president, Trump ordered the creation of a cryptocurrency working group tasked with proposing new digital asset regulations and exploring the creation of a national cryptocurrency stockpile.
Paul Howard, senior director at crypto market-maker Wincent, said that some of Trump’s moves have fallen short of what people bullish on crypto were expecting, with some having hoped that the government would announce plans to buy bitcoin.
Still, Howard said, “the organic growth we anticipate over the coming years in part due to the friendlier U.S. administration will likely outweigh the short term volatility and macro economic (tariff) news the next few weeks.”