US President Donald Trump’s announcement of new tariffs has sent financial markets, including cryptocurrencies, into a tailspin.
Bitcoin fell to $92,000, its lowest level since early January, while cryptocurrency derivatives trading platforms liquidated positions worth more than $2 billion, according to Coinglass data.
The new tariffs announced by Trump on Saturday included a 25% tariff on imports from Canada and Mexico, and a 10% tariff on Chinese goods, with the measures taking effect on Tuesday.
Trump said the move was part of a broader strategy to boost border security and combat the opioid crisis, particularly fentanyl trafficking.
However, economists have warned of the repercussions of these policies on the US and global economy, as they are expected to lead to higher consumer costs and higher inflation rates, with the risk of a trade war that could affect global supply chains and lead to job losses.
Cryptocurrencies were negatively affected by these developments, as the price of Ethereum fell by 24% to reach $2,300, and its traders suffered losses of $528 million in 24 hours.
Bitcoin traders also lost $421 million due to liquidations.
Other cryptocurrencies such as XRP, DOGE, and ADA saw losses of more than 30%, while SOL and BNB fell by 15% each, leading to an 8% decline in the total market cap of cryptocurrencies.
Despite these losses, analysts believe that the new tariffs could boost demand for Bitcoin as a safe haven against inflation.
According to Jeff Park, Head of Alpha Strategy at Bitwise Asset Management, Trump’s policies could contribute to creating a favorable environment for Bitcoin to flourish, especially if they lead to a weakening of the dollar and increased pressure on the global economy.
Park points out that these developments could reinforce countries’ drive to diversify their reserves away from the US dollar, and could lead to a new economic agreement similar to the Plaza Accord 2.0 (the Plaza Accord was a 1985 agreement between the governments of France, West Germany, Japan, the United States, and the United Kingdom to devalue the US dollar against the Japanese yen and the German mark through intervention in foreign exchange markets), which would increase the attractiveness of Bitcoin as a store of value.
The decline in the value of foreign currencies due to inflation is likely to push individuals and institutions to invest in Bitcoin, which could lead to a sharp increase in its value in the long term.
