Trump's Tariffs Spark Crypto Market Turmoil, Bitcoin Plummets

Bitcoin and the broader crypto market experienced a significant downturn over the weekend, with Bitcoin's price plummeting to its lowest level since early January. The market turmoil was triggered by U.S. President Donald Trump's announcement of new tariffs on imports from Canada, Mexico, and China, which sparked concerns about rising inflation and potential stagflation.

The new tariffs, set to take effect on Tuesday, include a 25% levy on imports from Canada and Mexico, as well as a 10% tariff on Chinese goods. Trump framed the measures as part of a broader strategy to address border security and combat the opioid crisis, particularly fentanyl trafficking. However, economists warn that these tariffs could increase consumer costs and worsen inflation, potentially leading to a trade conflict that affects all nations involved and results in job losses and supply chain disruptions.

The announcement of these tariffs has triggered volatility in the crypto market, with investors reacting to fears of mounting inflationary pressures. Bitcoin fell below $100,000 on Saturday and continued its decline to $92,000, while Ethereum dropped 24% to $2,300. The market turbulence led to $1.7 billion in long position liquidations over 24 hours, with Ethereum traders experiencing $528 million in losses and Bitcoin traders facing $421 million in liquidations. The overall crypto market capitalization shrank by approximately 8%, with most crypto assets recording double-digit losses within a day. XRP and DOGE fell 30%, ADA declined 35%, while SOL and BNB each dropped 15%.

Analysts believe that Trump's new tariffs could lead to increased demand for Bitcoin as a hedge against inflation. However, many caution that ongoing market volatility may continue to pressure prices downward in the short term. According to Jeff Park, head of alpha strategies at Bitwise Asset Management, Trump's tariff policies could inadvertently set the stage for a Bitcoin boom. Park suggests that the implementation of new tariffs could weaken the dollar and create conditions favorable for Bitcoin's growth, as the US grapples with the Triffin Dilemma. The tariffs are viewed as a strategic move to temporarily weaken the dollar, potentially leading to a multilateral agreement similar to "Plaza Accord 2.0" that could reduce dollar dominance and encourage countries to diversify their reserves