The cryptocurrency market experienced a significant downturn on Monday, February 3, 2025, following the announcement of new tariffs by U.S. President Donald Trump. The administration imposed a 25% tariff on imports from Canada and Mexico, and a 10% levy on Chinese goods, effective immediately. These measures have heightened fears of a global trade war, leading to a broad sell-off across financial markets, including cryptocurrencies.
yea pic.twitter.com/wP21vRY1XE
— Crypto Rover (@rovercrc) February 3, 2025
Market Impact
Bitcoin (BTC), the leading cryptocurrency by market capitalization, fell by approximately 2.5%, trading at $95,344, down from over $105,000 the previous Friday. This decline marks a three-week low for Bitcoin. Other major cryptocurrencies faced even steeper declines:
- Ethereum (ETH): Dropped 12%, trading at $2,500.
- XRP: Plummeted 9.7% to $2.35.
- Solana (SOL): Decreased by 3.7%.
- Dogecoin (DOGE): Fell 7.9% to below $0.25.
In total, over $2 billion was wiped from the crypto market within 24 hours, reflecting the severity of the sell-off. The recent downturn underscores the increasing sensitivity of cryptocurrencies to global economic events and geopolitical tensions. Ryan Lee, an analyst at Bitget Research, noted:
The current reaction underscores how geopolitical tensions and policy decisions are increasingly shaping cryptocurrency market dynamics.
Javier Molina, an analyst at eToro, emphasized the importance of monitoring key support levels for Bitcoin, suggesting that a breach below $90,000 could signal a more prolonged bearish trend.
Trump pic.twitter.com/27tOYIbHe3
— HodlFM Team (@Hodl_fm) February 3, 2025
McMillin, chief investment officer at crypto fund manager Merkle Tree Capital, according to Decrypt, said:
In the short term, we’ve bottomed. Market makers have used this tariff news cycle to sweep the leveraged longs and there is now very little liquidity worthy of pushing price lower.
Broader Market Reactions
The imposition of tariffs has not only affected the crypto markets but has also led to declines in traditional financial markets. Global stock indices have reported losses, and commodities have experienced increased volatility. Investors are expressing concerns that escalating trade conflicts may weaken economic growth, impact corporate earnings, and contribute to inflation.
While the immediate reaction has been negative, some analysts believe that after absorbing the initial shock, Bitcoin and other cryptocurrencies may begin to operate based on their underlying fundamentals. The resilience of Bitcoin, maintaining support in the high $90,000 range during recent sell-offs, is attributed to strong demand catalysts in its institutional adoption path.
There’s understandably been a lot of panic surrounding the market volatility and sudden selloffs.
— Richard Teng (@_RichardTeng) February 3, 2025
This is not the first time it has happened, and it won’t be the last either. Here are 3 pieces of advice I would like to share with you.
A thread. 🧵
However, the situation remains fluid, and investors are advised to exercise caution. The interplay between geopolitical developments and market dynamics will be crucial in determining the trajectory of the cryptocurrency market in the coming weeks.
HODL Team
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