Why is crypto crashing today? Bitcoin, Ethereum, DOGE, and others sink as Trump’s tariffs rattle markets

Cryptocurrency investors are waking up to a bloodbath this morning. As of the time of this writing, crypto markets are getting hammered as major coins including Bitcoin, Ethereum, and XRP, are down across the board. Popular meme coins like Dogecoin and $TRUMP have also collapsed.

But why is crypto crashing? Here’s what you need to know

Trump’s tariffs may launch a global trade war

Over the weekend, President Donald Trump initiated tariffs against America’s two largest trading partners. Trump ordered that tariffs as high as 25% be levied on numerous Canadian and Mexican goods entering the country. Trump also announced an additional 10% tariff on certain Chinese goods, as well as threatened tariffs on goods imported from the EU.

Tariffs are not paid for by the countries whose goods they are levied against. Tariffs are paid by the companies who are importing those goods into America. For example, if Walmart is importing goods from Mexico, Walmart must now pay those tariffs on the goods. Or if a U.S. energy supplier is importing gas from Canada, that U.S. energy supplier is on the hook for paying the tariffs.

Those U.S. companies will not simply absorb the costs of the tariffs, as this would affect their margins and thus their bottom lines. Instead, those companies will pass the cost of the tariffs on to American consumers, raising the costs that Americans must pay for goods.

Canada has already outlined its response to Trump’s tariffs, placing a 25% tariff on numerous American goods entering the country. Mexico says it will follow suit with tariffs of its own on U.S. imported goods. It is likely that China will follow suit, and if Trump unleashes tariffs on the European Union, the EU will react in kind.

In other words, Trump’s tariffs could mean the world is on the cusp of a global trade war.

Trade wars increase costs for businesses and consumers. Because of higher prices, consumers tend to spend less, hurting businesses’ bottom lines. The higher costs also lead to inflationary pressures. All this can dramatically increase economic uncertainty—and markets hate uncertainty, including cryptocurrency markets.

The risk of a global trade war is sinking crypto markets

Trump’s tariffs and the resulting trade war they look to be kicking off are sending crypto markets tumbling. As of the time of this writing, major cryptocurrencies are tanking.

Bitcoin is currenlty down almost 4%, to just above $95,000 a coin. But that drop looks minuscule compared to other cryptocurrencies. Ethereum and XRP have crashed over 16%, while Cardano is down over 19%.

And it’s not just the more well-known coins that are tanking. Popular mem coins are also crashing. Dogecoin is currently down over 13%, while President Trump’s meme coin, $TRUMP, is down nearly 14%.

Of course, none of these coins are directly impacted by Trump’s tariffs. However, when economic uncertainty arises—as is the case with trade wars—investors tend to extract profits where they can while they can.

That’s why one possible reason for crypto’s collapse today may be profit-taking. Crypto markets have had a good run as of late, so it’s little surprise that many investors worried about the broader economic impacts of a global trade war may be seeking to lock in what profits they can now by selling their cryptocurrencies.

Another possible reason for the crypto fall today is that cryptocurrency markets are historically volatile—and if a global trade war does kick off, it could cause economic uncertainty worldwide.

During uncertain economic times, many investors tend to stay away from more volatile assets, leading to decreased demand in some markets. Fear of possible reduced demand for crypto in the near future may also be impacting crypto prices today.

Stock markets are in crisis, too

It’s important to note that Trump’s tariffs aren’t just rattling crypto investors. Stock market investors are also panicking this morning. While U.S. markets aren’t open as of the time of this writing, futures are down across the board.

In premarket trading, Dow Futures have dropped over 560 points, or 1.26%. S&P Futures are down 85 points, or 1.4%, and Nasdaq Futures are down 349 points, or about 1.62%.

There’s no telling how long Trump’s tariffs will stay in place, and it is yet unknown exactly how countries like Mexico and China will react, not to mention the European Union if Trump enacts tariffs against its goods too.

What does seem certain is that there will be significant uncertainty in both the cryptocurrency and stock markets for the near future.