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The crypto market was rocked after former U.S. President Donald Trump declared a national emergency and imposed sweeping tariffs on all countries, escalating global trade tensions. The new tariff policy, which includes a 10% blanket tariff and higher rates for major economies like China (34%), the European Union (20%), and Japan (24%), sent shockwaves through both the stock and crypto markets.
Market Reaction: Initial Surge, Then a Sharp Decline
Initially, Bitcoin (BTC) saw a brief rally as investors responded to the tariff announcement with what analysts called “uncertainty relief.” BTC peaked at $88,500 before dropping 2.6% to around $82,876 as details emerged. Similarly, Ether (ETH) plunged over 6%, falling from $1,934 to $1,797. The total crypto market cap also shrank 5.3% to $2.7 trillion.
Sentiment in the market took a hit, as reflected in the Crypto Fear & Greed Index, which plummeted to 25, signaling extreme fear. However, the panic was short-lived, with BTC recovering 0.8% to $83,205 and ETH bouncing back 1.2% to $1,810 in subsequent trading.
Stock Market Also Takes a Hit
The stock market was not spared. According to The Kobeissi Letter, the S&P 500 erased over $2 trillion in market value in a single session, translating to $125 billion per minute in losses. The tariffs have raised concerns about global economic instability and potential retaliatory measures from affected nations.
Market Certainty Could Be a Long-Term Positive
Rachael Lucas, an analyst at BTC Markets, explained the market’s knee-jerk reaction: big investors took profits, while smaller traders hesitated, leading to a 46% spike in trading volume. She warned that if countries like China or the EU retaliate, another wave of panic selling could occur.
However, David Hernandez, a crypto investment specialist at 21Shares, believes that the announcement provides much-needed clarity. He noted that while the tariff rates were higher than expected, removing speculation could benefit institutional investors looking for opportunities in compressed valuations.
What’s Next?
The global response to Trump’s tariffs will determine the crypto market’s next move. If China, Japan, or Mexico retaliate aggressively, further volatility is expected. However, if the tariffs mark a ceiling rather than an opening salvo, markets may stabilize, potentially benefiting long-term investors.
For now, the crypto world watches cautiously, bracing for the next move in the escalating trade war drama.