Bitcoin Price Falls Below $85,000 Due to Trade War and Uncertainty Over US Crypto Reserves – Firstpost

On Monday (March 3), the price of Bitcoin plunged nearly 10 per cent amid rising concerns about an intensifying trade war and uncertainty regarding a prospective US cryptocurrency reserve, prompting investors to seek safer options.

The largest cryptocurrency fell by 9.47 per cent, settling at $85,321.69 by the end of the day, with over a trillion dollars in total market capitalization in jeopardy.

The price declined further to $83,165.06 each as of Tuesday (March 4) morning, IST.

Ether, the second-largest cryptocurrency, experienced a drop of over 15 per cent, while XRP, Cardano, and Solana faced declines of nearly 20 per cent.

What caused the drop in cryptocurrency prices?

The decline in cryptocurrency prices was triggered by a widespread market sell-off of these digital currencies.

This sell-off followed an initial rise in digital asset prices after former President Donald Trump suggested establishing a national strategic cryptocurrency reserve.

The proposal would involve the government accumulating digital assets, mainly from confiscated holdings tied to legal cases or sanctioned individuals and companies.

However, skepticism arose swiftly, with investors doubting whether such a fund could receive congressional approval. “Everyone started buying, then began to wonder if it would actually happen,” stated Adam Button, managing director at Forexlive.

Despite Trump mentioning Bitcoin, Ether, XRP, Cardano, and Solana as potential reserve assets, the initiative is still far from becoming concrete.

“It’s one thing to tweet about it, but legislative action is needed for this to materialize,” Button remarked.

“And that remains a long shot.”

Additionally, the cryptocurrency markets faced further pressure from Trump’s announcement of a 25 per cent tariff on all imports from Mexico and Canada, both of which have stated their intention to respond.

Analysts believe that the trade war, combined with worries about slowing US economic growth, has heightened overall risk aversion.

Some industry leaders have voiced concerns regarding the structure of the proposed reserve. Coinbase CEO Brian Armstrong suggested that limiting the fund’s assets to Bitcoin “would likely be the best option,” describing it as “the simplest” and comparable to gold.

With contributions from AFP