The emergence of President Donald Trump has further pushed the cryptocurrency market into the limelight, while the new administration became a popular player in the sector. More so, the connection between the new president and the virtual assets industry is evident in how cryptocurrencies crashed in reaction to Trump’s trade war.
Initially, Trump opposed cryptocurrencies, labeling them as a scam. A recent repentance saw the new president embrace digital assets for personal wealth and also vow to support the sector. His family has an organization World Financial Liberty which helps pursue their interest in the crypto sphere.
The president promised to make the USA the world capital of cryptocurrency, professing his interest in the sector. Furthermore, Donald Trump recently nominated Paul Atkins to replace Gary Gensler as the chairman of the United States Securities and Exchange Commission.Â
This move, according to many crypto enthusiasts, is a fulfillment of Trump’s promise to correct the shortcomings of Biden’s tough approach to the sector. Atkins in the past once warned Gary Gensler that the SEC’s stern enforcement campaign against crypto firms could drive them abroad.
He opined that such a situation could halt the growth of the cryptocurrency space in the US. While most of Trump’s recent decisions triggered green upticks across the market, the crypto space is also suffering from some of his policies.
The threats of imposing tariffs on Canada, Mexico, and China caused a freefall in digital asset prices.
How the crypto market reacted to Trump’s trade war
After Donald Trump imposed a 25% tariff on imports from neighboring countries; Canada and Mexico, the prices of cryptocurrencies crashed massively
Similarly, the president also announced 10% taxation on imports from China. Despite not having any direct impact on the market, various digital assets negatively reacted to the announcement, erasing a huge amount of investment.
During that period, the market capitalization of the crypto market dipped to $3.5 trillion from $3.7 trillion. The high volatility forced BTC to lose up to 14% value dropping to around $92,000, while ETH went down by 17%. Other top tokens like SOL, XRP, DOGE, PEPE, and TRUMP all plummeted.
The massive selloff surfaced as part of the global downturn in the financial markets as Trump’s trade war prepares to go into full effect. Before announcing the tariffs, the president already urged Americans to brace up for the impact of the taxes.
He explained that the pain from the tariff would be worth the price of making America great again. Donald Trump hinted that he could also impose similar tariffs on the UK and the European Union.
However, friendly negotiations between the countries on February 1, 2024, supported BTC to recover a bit. Shortly after news of the negotiations surfaced, Bitcoin gained $4,000.
Parting Words
Gradually, the cryptocurrency market is rebounding as top tokens are recording green ticks. Nevertheless, the improvement cannot cover the new market trends Trump’s trade war exposed.
Foremost, the effect of the trade war further confirms the strength of Trump’s influence on the market. His friendly campaign promises, launching of TRUMP OFFICIAL, and some of his appointments made crypto enthusiasts closely monitor his decisions in recent times.
Without a doubt, Donald Trump has become an influential figure in the industry. Another reality of Trump’s trade war is how investors are turning their back on crypto to stockpile Gold.
Gold soared amid the struggles of the crypto market in the last few weeks, recording new figures. During the run, Gold surpassed its all-time high of $2,860, reflecting how investors are trusting it.
Bitcoin in the last few years may have grown in popularity and embracement, but still, investors trust Gold as an edge against inflation. Likewise, the trade war further proves the growing synergy between the crypto market and the traditional finance sector.
The stock of tech companies holding crypto or related digital assets investments fell in reaction to the tariff increase news. Similarly, whenever AI or tech stocks suffer massive sell-offs, the cryptocurrency market often reacts negatively.
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