Bitcoin Plunges as Trump’s Tariff Plan Sparks Crypto Selloff

Trade policy upheaval triggers record-breaking liquidations and market volatility.

The cryptocurrency market experienced a dramatic selloff over the weekend as U.S. President Donald Trump announced new trade tariffs targeting Canada, Mexico, and China. Bitcoin dropped as low as $91,201 on Binance, marking a 13.5% decline from recent highs.

The announcement detailed a 25% tariff on most imports from Canada and Mexico, while Chinese products will face a 10% duty. Additionally, Canadian energy resources will be subject to a 10% tariff. These measures are set to take effect on Tuesday.

Market reaction was swift and severe across the cryptocurrency sector. Bitcoin (BTC) managed to stabilize around the $95,362 level, while Ethereum (ETH) experienced a steeper decline of 15.8%, trading at $2,602.

Other major cryptocurrencies faced similar pressure. XRP fell 16.4% to $2.40, Dogecoin declined 15.4% to $0.25, and Cardano dropped 19.4% to $0.71. Solana showed relative strength but still decreased by 6.6% to $197.7.

The overall cryptocurrency market capitalization contracted by approximately 14% over the weekend, falling to $3.08 trillion. This movement coincided with the largest liquidation event in crypto history, with total liquidations surpassing $2.2 billion in just 24 hours, according to data from Coinglass.

Michaël van de Poppe, founder of MN Consultancy, highlighted the historic nature of the event, noting that the liquidations exceeded those seen during previous major market events such as the FTX collapse and the Luna crisis.

The U.S. dollar strengthened amid the market turmoil, with the Dollar Index (DXY) reaching 109.65. This movement reflected a broader flight to traditional safe-haven assets as investors reassessed their risk exposure.

Market analyst Markus Thielen from 10x Research noted that while the tariffs were anticipated, their implementation still managed to derail Bitcoin’s recent rally. He suggested that market participants had been more focused on other developments, such as the DeepSeek narrative.

Canada and Mexico have already announced plans for retaliatory tariffs, while China has stated its intention to challenge the U.S. measures through the World Trade Organization. These responses have added another layer of uncertainty to market conditions.

Jeff Park, Head of Alpha Strategies at Bitwise Invest, offered a contrarian perspective on the situation. He suggests that the tariffs might actually benefit Bitcoin in the long term by potentially weakening the U.S. dollar and driving investors toward alternative stores of value.

Park’s analysis connects the tariff strategy to broader economic goals, including efforts to address trade imbalances and manage Treasury yields. He argues that these conditions could create an environment where Bitcoin thrives as a hedge against currency devaluation.

However, economist Alex Krüger presents a more cautious view, emphasizing Bitcoin’s nature as a risk asset. He warns that aggressive tariffs typically have negative implications for risk assets and the broader economy.

The cryptocurrency market’s reaction aligns with traditional financial markets, which also showed stress in response to the trade policy changes. This correlation continues to demonstrate crypto’s increasing integration with broader financial markets.

Technical analysts are closely monitoring key support levels for Bitcoin, particularly as the price attempts to stabilize above the $95,000 mark. The next few trading sessions could prove crucial in determining whether the current price level represents a temporary bottom.

Trading volumes across major exchanges have surged as market participants adjust their positions. This increased activity suggests high levels of market uncertainty and diverging views on the medium-term impact of the trade measures.

The Federal Reserve’s potential response to these developments adds another dimension to market considerations. Any shift in monetary policy stance could further influence cryptocurrency market dynamics.

International reaction to the tariffs continues to develop, with various nations considering their response options. The evolving situation may lead to additional market adjustments as new information becomes available.

Market data indicates that smaller cryptocurrencies, particularly those with lower trading volumes, experienced more pronounced price swings during the weekend’s events.

photo source / Blockonome