Impact of America’s trade disputes on Bitcoin and other cryptocurrencies

On Monday, major cryptocurrencies experienced a decline, likely due to the recent announcement by the United States of fresh tariffs on some of its trading partners. Investors appear to be concerned about the potential escalation of global trade conflicts, prompting a shift away from risky assets. This resulted in Bitcoin hitting a three-week low and ether reaching its lowest point since September.

President Donald Trump’s decision to impose a 25% tariff on Canada and Mexico, along with a 10% tariff on China, signals the initiation of protectionist trade policies. As a result, a new trade war has been triggered with America’s top three trading partners, who also happen to be significant contributors to the country’s almost $1 trillion trade deficit.

Following the announcement, both Canada and Mexico retaliated with tariffs on the USA, raising fears of a full-scale trade war. China, on the other hand, has expressed intentions to challenge the tariffs through legal means. Furthermore, Trump has indicated that additional tariffs on the European Union are likely to be implemented in the near future.

The timing of Trump’s tariff announcement, which occurred on a Saturday, allowed cryptocurrencies to be traded while other traditional financial instruments were not active due to the weekend. The decline in digital currencies suggests that the uncertain trade environment may affect the previously rising crypto market, a trend that has been consistent under Trump’s presidency.

Bitcoin’s value dropped to around $94,000 on Monday, reaching a three-week low of $91,000. This decline comes after the cryptocurrency had achieved a record high of over $107,000 on January 20, coinciding with Trump’s inauguration. Memecoins, a type of volatile cryptocurrency inspired by internet or cultural trends, also experienced significant losses. Coins associated with Trump and Melania recorded drops of 12% and 13%, respectively, while Dogecoin fell by more than 24%.

Investors had initially anticipated a surge in cryptocurrencies under Trump’s administration, considering his campaign’s pro-crypto stance and the influence of cryptocurrency advocate Elon Musk as an advisor. Key appointments within Trump’s administration, such as Paul Atkins at the Securities and Exchange Commission (SEC), also hinted at a favorable regulatory climate for cryptocurrency.

Overall, the market reaction to Trump’s trade policies suggests a growing concern among investors regarding the future of global trade relations and the impact on digital assets. The volatile nature of cryptocurrencies makes them susceptible to external factors, highlighting the interconnectedness of the global economy and the cryptocurrency market.