On Monday, Bitcoin’s value fell by almost 10 percent as escalating trade disputes and uncertainties regarding the creation of a U.S. cryptocurrency reserve fund prompted investors to shy away from riskier assets.
Initially, following comments from U.S. President Donald Trump about establishing a national cryptocurrency reserve, Bitcoin and other digital assets saw a rise. However, doubts about the viability of this initiative quickly led to a significant price drop.
By the end of the day, Bitcoin had decreased by 9.47 percent, trading at $85,321.69 each. The overall valuation of the cryptocurrency market remains above one trillion dollars, with Bitcoin retaining the largest portion.
Ether, the second-largest digital currency, fell by over 15 percent, while other prominent cryptocurrencies such as XRP, Cardano, and Solana experienced declines nearing 20 percent.
“Everything is being liquidated. There’s a de-risking process happening among crypto investors,” noted Forexlive manager Adam Button.
What sparked the interest in Trump’s crypto reserve?
Trump stated that his January executive order on digital assets would establish a reserve encompassing various cryptocurrencies, including Bitcoin, Ether, XRP, Solana, and Cardano—some of which had not been previously mentioned.
He highlighted that Bitcoin and Ether would be pivotal to this reserve. His comments on Sunday resulted in a 20% increase in Bitcoin from its lows in November. The cryptocurrency had been on a downward trend since mid-January amid concerns that Trump had not delivered on his promises to ease regulations.
The decline in cryptocurrency values was further exacerbated by Trump’s announcement of a 25 percent tariff on all imports from Mexico and Canada, both of which have vowed to respond in kind.
Early Monday, cryptocurrency prices surged after Trump cited five digital assets the day before as potential components of a national strategic reserve fund.
Button suspects that worries surrounding the trade war are amplified by fears regarding the U.S. economic outlook, which many anticipate will weaken in the first quarter.
Nevertheless, Trump’s commitment to create a strategic reserve has generated excitement within the beleaguered crypto industry, which has faced challenges in recent weeks.
In February, Bitcoin experienced a drop of over 17 percent, marking its sharpest monthly decline since June 2022. After reaching a high of $105,000 in early January, it has since lost more than a third of its worth.
Bitcoin’s rally following Trump’s November election victory was fueled by the belief that he would endorse a strategic Bitcoin fund and reverse the regulatory measures implemented by former President Joe Biden.
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