Bitcoin, Ethereum, other tokens crash following Trump's new tariff imposition
What's the story
The cryptocurrency market witnessed a major crash on Monday, with Bitcoin and Ethereum taking the biggest hits.
The slump was catalyzed by US President Donald Trump's decision to impose tariffs on imports from Canada, Mexico, and China.
Bitcoin's price fell by as much as 6% to nearly $93,000 while Ethereum saw a shocking 27% plunge at one point—its biggest intraday drop since 2021.
Ripple's fall
Ripple-linked XRP also impacted by market downturn
By early afternoon in Singapore, Ethereum was trading at around $2,500. Ripple-linked XRP also felt the heat of this market downturn, its value dropping by 17% to $2.20.
These steep drops in cryptocurrency values are a direct reaction to Trump's tariff announcements over the weekend, which included a 25% levy on Canadian and Mexican imports and a 10% duty on Chinese goods.
Market response
Trade war concerns trigger market-wide impact
BTC Markets CEO Caroline Bowler told Bloomberg that "Trump's tariff war is impacting the whole market."
She further explained, "Concerns about trade wars and stagflation triggering recessions are cascading across altcoins and Bitcoin."
The widespread impact on the cryptocurrency market is a stark contrast to the recent optimism fueled by Trump's pro-crypto stance during his campaign.
Liquidity issues
Ethereum's liquidity concerns exacerbate losses
Ethereum's losses were especially bad as fears of its less resilient liquidity than other digital assets loomed large.
"Ether is being battered more than Bitcoin, Solana, and Ripple mainly because there is an expectation that the latter are more likely to be included in a US digital asset stockpile," Jonathan Yark, senior quant trader at Acheron Trading, told Bloomberg.
Position liquidation
Over $1 billion in leveraged crypto positions liquidated
During the early Asian trading hours on Monday, over $1 billion worth of leveraged crypto positions were liquidated. Ethereum trades made up the bulk of this unwinding.
Sean Dawson, head of research at Derive.xyz, indicated Ether could find support around the $1,900-$2,000 range with options markets pricing in a 25% chance of hitting $2,000 before month-end.
Wider impact
Broader crypto market and Trump-linked memecoins also affected
The broader crypto market also witnessed extreme selling pressure with CoinGecko data indicating total market cap plummeted by some $360 billion.
Even Trump-linked memecoins launched in recent weeks by the President's wife Melania Trump were hit hard, trading some 75-90% below their peaks.
This widespread impact highlights the volatility of the cryptocurrency market in the wake of global economic events.