The cryptocurrency market has experienced a significant downturn, with Bitcoin price dropping below the $80,000 threshold, reaching $75,741—a decline of 3.32% as of 06:27 GMT. This marks an approximate 8% loss over the past week.
The cryptocurrency market saw an initial surge, gaining more than half a trillion dollars in value after former President Trump announced a new strategic reserve last month. However, the rally began to reverse last week as Trump reaffirmed his commitment to a protectionist trade agenda, signalling that he would proceed with his planned tariffs.
The downturn is largely attributed to recent tariff announcements by U.S. President Donald Trump, which have intensified fears of a global trade war and potential recession. Data from CoinGlass indicates that the recent downturn in cryptocurrency prices triggered a surge in liquidations, with Bitcoin long positions alone seeing $250 million erased in the last 24 hours.
President Trump’s declaration of sweeping tariffs has sent shockwaves through both traditional and digital financial markets. The immediate impact on U.S. stock futures has been stark. S&P 500 E-minis fell by 4.27% to 4,892.25 points, Dow E-minis declined by 3.96%, and Nasdaq 100 E-minis dropped 4.58%.
The repercussions of the tariff announcements have been felt globally. In Australia, the ASX 200 plummeted by 4.23%, erasing $97 billion in value. Major sectors, including banking and mining, faced substantial losses, with Commonwealth Bank shares dropping 6.23% and BHP falling 6.11%.
The energy sector also suffered due to declining crude oil prices, with Santos and Ampol experiencing significant declines. In Asia, markets heavily reliant on trade were severely impacted. Hong Kong’s benchmark index plummeted by 13%, marking its worst drop since the 1997 Asian financial crisis. Major indexes in Shanghai, Taipei, and Tokyo also recorded declines between 7% and 10%.
The cryptocurrency market has not been immune to the escalating trade tensions. Bitcoin’s decline to $75,741 represents a significant drop, with the cryptocurrency losing nearly 20% of its value since the beginning of the year. Ethereum, the second-largest cryptocurrency by market capitalization, also experienced a sharp decline, dropping 4.37% to $1,508.34. The ETH/BTC ratio fell by 1.29%, indicating a broader market downturn affecting various digital assets.
The GMCI 30 Index, which tracks the top 30 cryptocurrencies, fell by 14.07% and is down 37.57% since the start of the year. This substantial decline underscores the vulnerability of the cryptocurrency market to macroeconomic developments and investor sentiment.
In response to the escalating trade tensions and market volatility, investors are seeking refuge in traditional safe-haven assets. The Japanese yen and gold have seen increased demand as traders move away from risk-driven assets such as equities and cryptocurrencies. This shift reflects a broader trend of risk aversion amid growing concerns about a potential global economic slowdown.
Despite the market turmoil, President Trump has defended the tariff measures, describing them as a “beautiful thing to behold” and asserting their long-term benefits for the U.S. economy. He emphasized that other nations are eager to negotiate as the U.S. moves to eliminate trade deficits. However, financial markets have reacted negatively, with significant declines across global indices and heightened fears of a recession.
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