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Cryptocurrency prices tumbled after Donald Trump threatened sweeping tariffs on the US’s largest trading partners, undermining investors’ early expectations the US president would deliver a boost to the industry.
Bitcoin sank as much as 7 per cent to $92,500 on Monday, its lowest level in three weeks, leading a rout of the sector. Ethereum, the second-largest and widely used in decentralised finance trading, fell more than a fifth to $2,565 per token. The two tokens retraced some of their losses after Mexico and the US agreed to put tariffs on hold for a month, pushing bitcoin to above $101,000.
The declines took the losses over the weekend to a nominal value of $430bn, according to CCData, amounting to a 13 per cent decline of the entire market.
Traders shied away from riskier assets after Trump slapped steep import duties on goods from Mexico, Canada and China. The sharp falls unravelled many cryptocurrency price gains since Trump’s inauguration two weeks ago, when investors had hoped he would boost their fortunes.
“There’s good Trump and bad Trump,” said Geoff Kendrick, global head of digital assets research at Standard Chartered. “The good version of Trump is [him saying] the industry is going to move forward . . . regulatory changes. Bad Trump is things like tariffs and more volatile markets, which is . . . less helpful,” Kendrick said.
Trump exuberantly courted the digital asset industry during his election campaign, winning financial and vocal backing from the sector.
In return he has signed an executive order supporting the growth and use of digital assets and blockchain technology and vowed to create a national stockpile of bitcoin, moves that investors celebrated. But his tariffs jolted the market and sent shares in crypto companies lower.
Shares in crypto exchange Coinbase lost as much as 5.6 per cent and bitcoin-hoarding software group MicroStrategy shed 5.4 per cent in early trading in New York. They later regained losses with Coinbase down 2.38 per cent and MicroStrategy up 3.67 per cent.
“Trump said no one has to pay taxes on gains in crypto and then got rid of all the gains,” said Tyler Hogge, partner at Pelion Venture Partners.
Among other coins, Ripple’s XRP and Cardano’s ADA tokens fell as much as 26 per cent and 15 per cent respectively on Monday. XRP later rose to be up 3.2 per cent while ADA was still down about 2.5 per cent.
Memecoins such as Dogecoin, backed by Elon Musk, dropped 12 per cent before recovering to be up 2.9 er cent. Trump’s own memecoin plunged as much as 23 per cent, to take its total losses since a peak two weeks ago to more than 75 per cent. It later recovered to be down about 10.6 per cent. The memecoin for Melania Trump lost 15.3 per cent, but later recovered to be down about 5 per cent.
“A tidal wave of fear, uncertainty and doubt has been unleashed across the cryptocurrency market,” said Petr Kozyakov, chief executive of crypto payments company Mercuryo.
He added the collapse in value of the Trumps’ memecoins “underlines the highly speculative nature of meme tokens and the high risks that they pose to the uninformed”.
Since becoming president, Trump has increased his personal interest in crypto. The president and his wife launched their own memecoins in January, to backlash from crypto executives who warned the speculative tokens would damage the industry’s reputation.
Last week, Trump Media and Technology Group, in which Trump is a majority shareholder, said it would invest up to $250bn into crypto and other assets.
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