Topline
President Donald Trump’s extensive reciprocal tariffs seem to be affecting cryptocurrency prices on Monday, with bitcoin dropping below $77,000 for the first time since Trump’s electoral victory in November ignited a larger crypto rally, accompanied by declines in other tokens.
Many cryptocurrencies have nearly wiped out their gains since Trump’s election win in November.
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Key Facts
As of approximately 9:35 a.m. EDT on Monday, bitcoin had decreased by 2.1%, nearing $76,608, having dropped more than 6% since hitting a peak of $83,731 on Sunday.
Bitcoin has experienced a significant decline of 29% since it reached an all-time high of $109,026 on Trump’s Inauguration Day in January, and it has almost completely erased its gains since the day after Election Day, when it surpassed $75,500.
Ethereum, the second-largest cryptocurrency by market capitalization ($182.5 billion), fell nearly 4% to $1,514, marking its lowest level since October 21, 2023.
In the past 24 hours, other cryptocurrencies also saw price declines, including XRP (13%), BNB (6.6%), Solana (11%), and Tron (5.5%), while the meme token Dogecoin fell by 13%.
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Big Number
Approximately $360 billion has been eliminated from the global crypto market’s total capitalization since it peaked at $2.78 trillion on April 2, the day Trump announced the reciprocal tariffs on U.S. trade partners, dropping to $2.42 trillion by Monday morning, according to CoinMarketCap.
Why Are Trump’s Tariffs Impacting Crypto?
“There is considerable volatility at the moment,” noted Geoff Kendrick, head of Standard Chartered’s digital assets research, in a note on Sunday. He indicated that investors may be retreating from cryptocurrencies amid ongoing volatility in U.S. markets. Julia Zhou, COO of crypto firm Caladan, remarked to Bloomberg that the crypto market often acts as a leading indicator for risk assets, suggesting cryptocurrencies may “experience sharper corrections” as stocks respond to Trump’s tariffs.
How Have Trump’s Tariffs Impacted The U.S. Stock Market?
A two-day sell-off following Trump’s tariff announcement last week erased over $4.9 trillion in market capitalization among S&P 500-listed stocks, with Nvidia, Apple, and Tesla experiencing the most considerable losses. The Dow Jones Industrial Average, S&P, and tech-heavy Nasdaq all fell at least 10% from their recent record highs, while the Nasdaq entered a bear market for the first time since 2022, trading over 20% below its all-time high set in December. U.S. stocks appeared to decline further early Monday, with Dow futures dropping by more than 900 points, and futures for the S&P and Nasdaq falling 2.9% and 3%, respectively.
Key Background
In the lead-up to his successful reelection in November, Trump expressed intentions to make the U.S. the “crypto capital of the planet.” He embraced the crypto industry, arguing that the Securities and Exchange Commission under President Joe Biden imposed stricter regulations over cryptocurrencies and exchanges. His election win prompted bitcoin to reach several new record highs, surpassing the $80,000, $90,000, and $100,000 marks within a month after Election Day, culminating in its record on Inauguration Day. Trump’s campaign was supported by several billionaires connected to the cryptocurrency industry, including Tyler Winklevoss, Cameron Winklevoss, and Chris Larsen. Last month, Trump announced plans to create a “crypto strategic reserve,” which would encompass bitcoin, ethereum, XRP, Solana, and Cardano. This announcement faced criticism from some, including Coinbase CEO Brian Armstrong, who suggested that the “best option” for Trump’s reserve would be to focus solely on bitcoin as the “successor to gold” for the government.
Tangent
Shortly before his inauguration, Trump introduced the meme coin $TRUMP, a digital investment that rapidly increased in value, achieving a market cap that exceeded $9 billion within days. It remains unclear how much revenue from the token goes to Trump, although approximately 80% of unreleased tokens are held by the Trump Organization affiliate CIC Digital LLC and Fight Fight Fight LLC. First Lady Melania Trump subsequently launched the crypto asset $MELANIA. In October, Trump also established the crypto firm World Liberty Financial, which lists his sons Eric, Donald Jr., and Barron as ambassadors.
Further Reading
Dow Futures Tumble 900 Points As Recession Fears Accelerate (Forbes)
