Crypto Markets Plunge as Trump's Tariffs Spark Panic Selling

Crypto Markets Tumble Amid Trump's Tariff Announcement

In a sudden turn of events, the crypto market experienced a significant sell-off on February 3, 2025, following U.S. President Donald Trump's announcement of new tariffs. The market witnessed a wipeout of over $2 billion in just 24 hours, with Bitcoin (BTC) and other major cryptocurrencies taking a hit.

Bitcoin, the world's largest cryptocurrency, dropped nearly 6% to around $91,200 before bouncing back slightly. However, altcoins fared even worse, with Ethereum (ETH) tanking 18%, XRP (XRP) losing 20%, and Solana (SOL) falling 8%. The total market cap sank nearly 12% to $3.15 trillion.

Market participants attributed the sell-off to a mix of fresh U.S. tariffs, weak liquidity, and panic selling. Asia markets, in particular, were cited as being unable to handle negative news and apply independent thinking, leading to a knee-jerk reaction.

Analysts and traders weighed in on the situation. Matrixport co-founder Daniel Yan called it "another typical weak Monday," blaming Asia markets for their reaction to bad news. He highlighted extreme volatility, with Coinbase's ETH premium spiking to 6% while the top 100 tokens averaged a 22% loss.

Meanwhile, an X user under the alias @Coins_Kid noted that XRP's price structure suggests an "expanded flat wave 4 correction" since December. While some saw this as a potential buy-the-dip moment, overall sentiment appeared cautious.

Despite the chaos, Bitwise's head of alpha strategies Jeff Park believes tariffs are part of a much bigger game. He argues that the U.S. is looking for a way to weaken the dollar without crashing its ability to borrow cheaply, a kind of "Plaza Accord 2.0." With a weaker dollar, lower U.S. rates, and global economic uncertainty, Bitcoin could be heading "higher, violently faster," Park wrote.