Crypto Crash: Trump's Tariffs Erase Gains, Bitcoin Plunges 9%

Major cryptocurrencies, including Cardano's ADA, XRP, and Solana's sol, experienced a significant 21% drop on Tuesday, erasing all gains made following President Donald Trump's announcement of a U.S. crypto strategic reserve. The sharp reversal aligned with a cautious mood among traders after Monday's market rally, as previously noted by CoinDesk.

Trump's Sunday declaration that the reserve would include ADA, XRP, and SOL, alongside bitcoin (BTC) and ether (ETH), ignited a market frenzy. ADA soared over 60%, XRP climbed 33%, and SOL jumped 22% within hours. The promise of a government-backed crypto stockpile was hailed as a game-changer, with analysts predicting it could legitimize digital assets and drive institutional adoption.

However, the rally proved short-lived amid profit-taking and a general risk-off mood in broader equity markets. Trump's latest tariff announcements on Canada, Mexico, and China caused a massive selloff of crypto assets, completely reversing the previous day's crypto strategic reserve gains. Despite a slew of pro-crypto deregulation initiatives and supportive policies, investors view cryptocurrencies as risk assets strongly bound by the performance of the US equity market.

On Tuesday, China announced a 15% tariff on the import of various items after Trump doubled the tariff on imports from China to 20%. The U.S. President also confirmed that 25% tariffs on goods from Mexico and Canada would be effective on Tuesday. Bitcoin is down 9% in the past 24 hours amid the macroeconomic chaos, trading at $84,000 as of Asian afternoon hours. Ether lost 12% and trades just above $2,000 — its lowest since 2023.

A White House Crypto Summit scheduled for Friday has investors bracing for more clarity — or further turbulence — depending on what emerges from the talks.