What a difference two days makes. On Sunday, President Donald Trump announced his plans for the U.S. government to create a new “Crypto Strategic Reserve.” The news immediately sent crypt prices soaring—something the industry needed after weeks of declines.
However, less than 48 hours after Trump announced the Crypto Strategic Reserve, cryptocurrency prices are plunging. And this price change is also due to Trump—or rather, the tariffs he’s now enacted. Here’s what you need to know about the latest crypto crash.
Why are cryptocurrency prices plummeting?
As of the time of this writing, many major cryptocurrencies, including Bitcoin, Ethereum, XRP, and Solana, are down at or near double-digit percentages. Meme coin heavyweights like Dogecoin and Shiba Inu are also plummeting. As a matter of fact, this most recent crypto crash has wiped $300 billion off the value of cryptocurrencies as a whole, notes CNBC TV18.
But why? It all comes down to tariffs. In the past 24 hours, President Trump has confirmed that he will move ahead with his longstanding threat to implement tariffs on products from America’s neighbors and two of its largest trading partners, Canada and Mexico.
Both countries will see the United States levy 25% tariffs on some of their goods. However, Trump didn’t stop by raising tariffs only against its neighbors. The president also levied 20% tariffs on select goods imported from China, Reuters notes.
Yet, China, Mexico, and Canada haven’t taken Trump’s actions sitting down.
All three countries will enact tariffs on U.S. goods coming into their countries. This means that it will be more expensive for Chinese, Mexican, and Canadian businesses to buy U.S. goods, which will likely reduce the demand for those goods, hurting the U.S. companies and individuals who supply them.
It also means that a large part of the world likely just entered a trade war—including the countries behind its two largest economies. From an economic perspective, there is little benefit to trade wars. Prices of goods increase, demand drops, wages and jobs can be lost, and the resulting negative impact on economic activity can cause markets to drop.
This is where today’s crypto crash comes in.
Cryptocurrencies are already highly volatile assets. Their values can swing 10% or more on any given trading day. That volatility makes them one of the first assets that investors usually sell when there are signs that the economy at large may be entering into a potentially volatile phase. Investors hate volatility because it increases risk. And one way to protect yourself against both is to dump assets more susceptible to those kinds of scenarios.
Bitcoin, ETH, XRP, DOGE all drop
This morning, many of the world’s most popular cryptocurrencies are down significantly due to concerns over Trump’s trade wars. As of the time of this writing:
- Bitcoin is down over 9.3%
- Ethereum is down over 10.4%
- XRP is down over 9.4%
- Solana is down over 14%
- DOGE is down over 11%
- Shiba Inu is down over 8.8%
The most notable of these is Bitcoin, the world’s most well-known and popular cryptocurrency. Bitcoin surged to all-time highs after Trump won the election, topping out at nearly $110,000 per coin.
But in the last month, the price of Bitcoin has sunk, losing over 14% of its value. Year to date, the coin is down over 10%. Despite Trump being largely seen as a positive force for the industry, his geopolitical maneuvers and his readiness to start trade wars have made many cryptocurrency investors nervous, and the crypto markets have reacted in kind.
As of the time of this writing, Bitcoin currently sits below $84,000 per coin, wiping out all the gains it had seen on Sunday with Trump’s announcement.
Where the price of cryptocurrencies goes from here is anyone’s guess. But one thing seems certain: Yesterday’s “Crypto Strategic Reserve” bump didn’t last long.
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