Crypto markets plunge after Trump imposes tariffs on Mexican, Canadian and Chinese imports

It marks a sharp reversal for the cryptomarkets: the value of bitcoin and other digital assets surged after Trump won the US election in November

The value of bitcoin and other digital assets fell sharply on Monday after former US president Donald Trump announced tariffs on Mexican, Canadian and Chinese imports.

This marks a significant reversal for the cryptomarkets, which had rallied following Trump’s departure from the White House amid hopes the crypto industry would enjoy a renaissance under the new administration.

A number of senior figures in Trump’s administration are advocates of crypto, including Elon Musk, a close confidant of the president, and Howard Lutnick, the billionaire Wall Street veteran who has been picked to run the US commerce department. Trump himself launched a so-called memecoin called $TRUMP shortly before his inauguration last month.

All of this had stoked excitement in the digital assets industry that the new US administration will adopt a pro-crypto stance after facing a crackdown under Joe Biden, the previous president.

This enthusiasm sent bitcoin to a record high of more than $109,000 last month.

“Bitcoin and other crypto assets had a stellar run-up into Trump’s presidency, on hopes of a pro-crypto stance from the administration and traders’ enthusiasm for the memecoin launch,” said Vijay Ayyar, vice-president of corporate development and international at crypto exchange Luno.

“However, markets are now reacting to the tariffs, which are impacting crypto prices. This is because crypto prices are highly correlated to the broader markets, and tariffs are a key market driver.”

Bitcoin fell as much as 3 per cent to $92,344 on Monday. The world’s largest cryptocurrency had dropped below the key level of $90,000 earlier in the day.

Other major cryptocurrencies also declined. Ether dropped 2 per cent to $7,844, while XRP fell 1 per cent to $1.23. Dogecoin, the memecoin that was heavily promoted by Musk last year, lost 1 per cent to trade at $0.42.

Crypto markets, unlike other markets, trade on the weekend. Bitcoin prices rose on Saturday after Trump announced the tariffs on Mexican imports, but fell later in the day.

US stock markets joined the sell-off on Monday, while the US dollar jumped as investors shunned riskier assets amid concerns that a trade war will fuel inflation.

Mohit Kumar, an economist at Jefferies, the stockbroker, told clients that “today, markets will remain dominated by tariffs and trade wars” and added: “Tech and crypto would be impacted, not because they are directly impacted by tariffs but because they are widely owned and investors would exit positions.”