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"Trump Tariffs Spark Record Ether ETF Volatility"

Coin WorldTuesday, Feb 4, 2025 8:00 am ET

1min read

US Ether ETFs Hit Record Volume as Trump Tariffs Rattle Market

The US-China trade war has sent shockwaves through global markets, with cryptocurrencies being no exception. President Trump's decision to impose tariffs on China, Canada, and Mexico has led to a surge in volatility in the crypto market, with Ether (ETH) exchange-traded funds (ETFs) seeing record trading volumes.

On Monday, the crypto market experienced a significant sell-off, with Bitcoin (BTC) and Ethereum (ETH) prices dropping by over 5% and 7% respectively. The sell-off was triggered by Trump's announcement of new tariffs on Chinese goods, which raised fears of a global trade war. However, the market quickly rebounded, with BTC and ETH prices recovering to their pre-announcement levels.

The volatility in the crypto market has led to a surge in trading volumes, with US Ether ETFs seeing record volumes. According to data from CoinMarketCap, the Grayscale Ethereum Trust (ETHE) saw a trading volume of over $1 billion on Monday, the highest daily volume since its launch in 2017.

The surge in trading volumes can be attributed to investors seeking safe havens in the crypto market amid the global trade uncertainty. Ether, the second-largest cryptocurrency by market capitalization, has been particularly popular among investors, with its price surging by over 10% in the past week.

Analysts believe that the trade war could have a significant impact on the crypto market in the long run. Ben El-Baz, Managing Director of HashKey Global, told CoinDesk that the U.S.-China tariff conflict could dampen the appetite for risk assets and impact the positive sentiment in the crypto market. However, he noted that the damage could be mitigated if the U.S. implements more crypto-friendly policies.

Min Jung, a research analyst at Prestro Research, told CoinDesk that cryptocurrencies, despite being considered by some as digital gold, still largely behave like risk assets. As a result, the 10% tariff imposed by China on the U.S. is exerting pressure on crypto markets, similar to other global risk assets.

The initial market reaction may have been an overreaction, according to Jung, but he anticipates continued volatility as the markets process

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