The cryptocurrency market suffered another sharp decline this week as growing concerns over a potential U.S. trade war, coupled with disappointment over President Donald Trump’s national crypto reserve plan, led investors to flee riskier assets.
Bitcoin dropped below $79,000, its lowest level since mid-November, marking a 5% decline in just 24 hours. Other major cryptocurrencies followed suit, with XRP sliding 4%, Solana plummeting 7%, and Cardano losing 8% of its value.
The sell-off comes amid escalating economic uncertainty fueled by Trump’s aggressive tariff policies. Over the past few weeks, the administration has imposed and partially lifted tariffs on key trading partners, including Canada, China, and Mexico, stoking fears of a broader trade conflict. These protectionist measures are expected to drive up inflation and increase costs for imported goods, prompting investors to shift away from high-risk assets like crypto.
Further adding to market anxiety, Trump addressed concerns over a possible recession in a recent Fox News interview. He avoided giving a definitive answer but acknowledged that the U.S. economy is entering a “period of transition.” His comments have only heightened speculation that the administration’s policies could trigger an economic downturn, making investors even more risk-averse.
The crypto market remains highly volatile with fears of inflation, trade instability, and economic slowdown dominating headlines. As traders weigh these macroeconomic factors, many pull capital from digital assets and seek safer investments, further exacerbating the market’s decline.
Trump’s Bitcoin Reserve Plan Fails to Boost Market Confidence
Investor enthusiasm for President Donald Trump’s national crypto reserve plan has quickly faded after details revealed that the U.S. government would not actively purchase Bitcoin or other cryptocurrencies.
Many in the crypto community had anticipated a large-scale government accumulation of digital assets, which could have fueled demand and pushed prices higher. Instead, Trump’s announcement confirmed that the reserve would only include crypto assets seized from illicit activities—a decision that left market participants underwhelmed.
“While formalizing a Bitcoin reserve is a milestone, it doesn’t create immediate buying pressure, disappointing those expecting aggressive accumulation,” said Haider Rafique, global chief marketing officer at crypto exchange OKX in an interview with Fortune Magazine.
The lack of direct government purchases has contributed to the market downturn, with Bitcoin dropping by 6% since the announcement.
The broader crypto market has also struggled recently, losing 25% of its total market capitalization since December. This decline was initially triggered by the Federal Reserve’s unexpected policy shift, indicating that fewer interest rate cuts would be made in 2025 than previously anticipated.
Lower interest rates typically make speculative investments like cryptocurrency more attractive, and the central bank’s hawkish stance has added further pressure on digital assets.
While Trump’s presidency was initially seen as a bullish factor for crypto due to his deregulation, recent economic policies—including trade tariffs and a lack of direct government investment in digital assets—have created uncertainty. With macroeconomic headwinds mounting, the crypto market continues to face downward pressure.
Broader Economic Indicators Signal Recessionary Pressures
The impact of the administration’s policies extends beyond the cryptocurrency market. Traditional financial markets have also been affected, with the Dow Jones Industrial Average plummeting 890 points (over 2%), the S&P 500 declining by 2.7%, and the Nasdaq Composite dropping by 4%.
High-profile companies, such as Tesla, experienced significant share price declines. Tesla’s stock fell by 15%, marking a 50% decrease from its all-time high in December.
Quick Facts:
- Bitcoin’s price fell below $79,000, marking a 5% decline over 24 hours.
- President Trump’s executive order established a Bitcoin reserve funded solely by seized assets, disappointing market expectations.
- Major stock indices, including the Dow Jones and Nasdaq, experienced significant declines amid recession fears.
- Global trade tensions, particularly with China, have intensified, contributing to market volatility.
