This article does not constitute investment advice. The author does not hold any positions in the stocks mentioned herein.
Trump’s New Tariffs Shake Crypto Markets
Recently, former President Trump initiated a wave of tariffs that struck at the core of some of America’s key trading partners. This move unsettled the crypto market, the only trading sphere that remained actively buzzing over the weekend. As the altcoin market struggled to absorb the brunt of these changes, analysts observed a significant downturn, exemplified by a drop of approximately 20% in the $TRUMP meme coin within a short 24-hour span. One analyst suggests that a fundamental shift has occurred in the altcoin landscape.
*PRESIDENT TRUMP OFFICIALLY SIGNS 25% TARIFFS ON MEXICO & CANADA, 10% TARIFFS ON CHINA FOLLOWING WEEKS OF DISCUSSION
The White House has released a detailed statement explaining the rationale & goals of the tariffs. Below is the full text of President Trump’s statement to the…
— Stock Talk (@stocktalkweekly) February 1, 2025
Details of the Tariffs
On February 1, 2025, Trump executed his pledge to implement a 25% tariff on all non-energy imports from Canada and Mexico, coupled with a 10% tariff on energy products from these nations. Additionally, a 10% levy was placed on all imports from China, alongside the removal of the de-minimis threshold, which previously exempted imports valued under $800. This change has significantly impacted retailers like Temu and Shein flooding the U. S.market. Notably, these tariffs come with an inherent escalation clause, meaning they will increase automatically in response to any retaliatory actions. The prospect of tariffs aimed at the EU has also been hinted at by Trump.
📊 UPDATE: Total liquidations today may be $8-10B, not $2B, per @benbybit.https://t.co/f7lhm18hXV
— Cointelegraph (@Cointelegraph) February 3, 2025
Impact on Crypto Markets
The ramifications of Trump’s latest moves were felt acutely within the cryptocurrency markets, leading to unprecedented levels of liquidations estimated between $8 and $10 billion. This figure dwarfs the capitulation that followed the collapse of FTX, marking one of the most turbulent periods in recent crypto history.
Ironically, the $TRUMP meme coin experienced significant losses during this tumultuous period, with its value plummeting by around 20% in just one day. This specific coin’s appeal primarily lies in its ability to unite enthusiasts around the persona of the former president.
The Dollar’s Rise and Its Effects
Much of the current weakness in the cryptocurrency realm can be attributed to the strengthening U. S.dollar. With tariffs increased, importers find themselves needing more dollars to manage the rising costs of imports, thereby elevating the dollar’s demand.
🚨 𝗖𝗿𝘆𝗽𝘁𝗼’𝘀 𝗥𝗲𝗰𝗸𝗼𝗻𝗶𝗻𝗴: 𝗜𝗻𝘀𝘁𝗶𝘁𝘂𝘁𝗶𝗼𝗻𝗮𝗹 𝗦𝘁𝗮𝗯𝗶𝗹𝗶𝘁𝘆 𝘃𝘀.𝗥𝗲𝘁𝗮𝗶𝗹 𝗣𝗮𝗻𝗶𝗰
Over $2 billion in liquidations in 24 hours—the largest in history—has sent shockwaves through the crypto ecosystem. Bitcoin tumbled 14% from its recent peak, … pic.twitter.com/6aqwfGBqkK
— Martin Leinweber (@mleinweber2) February 3, 2025
Market Analysis Insights
Martin Leinweber, a digital asset strategist at MarketVector, provided an in-depth analysis of the crypto market’s recent downturn. Focusing on altcoins like $TRUMP, Leinweber noted,
“Post-election, altcoins (light blue line in the graph below) saw huge outperformance after Trump’s victory, unlike previous cycles. But now? A massive, abnormal drawdown in recent weeks—far beyond what we’ve seen historically.”
He further elaborated,
“Altcoins surged early, fueled by speculative frenzy, but without deep institutional backing, the correction is hitting harder and faster than ever before. This is not like the last cycle—something has changed.”
The current lack of institutional interest presents a challenging outlook for the $TRUMP coin and its counterparts in the altcoin market.
Treasury Yields and Market Implications
The yields on U. S.Treasuries have seen a rise amidst growing inflation concerns, posing a negative outlook for risk assets, including Bitcoin. Research indicates that Bitcoin closely aligns with changes in the global M2 money supply, reflecting this trend roughly 83% of the time. Consequently, as Bitcoin’s value fluctuates, so too do altcoins like $TRUMP and $MELANIA. Currently, however, the global liquidity proxy is nearing a transition to negative territory, raising further concerns about market stability.
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