‘National emergency’ as Trump’s tariffs dent crypto prices

Crypto Markets Dip After Trump’s National Emergency Declaration and Tariff Announcement

The cryptocurrency market experienced a significant downturn following US President Donald Trump’s declaration of a national emergency and the imposition of sweeping tariffs on all countries as part of the ongoing trade war. The tariffs, which went into effect on April 5, saw the US imposing a 10% tariff on all countries, with some nations facing even higher rates, such as China with a 34% tariff, the European Union with a 20% tariff, and Japan with a 24% tariff.

Trump’s Tariff Announcement

During a speech in the Rose Garden at the White House on April 2, Trump stated that the US was charging countries approximately half of what they were and had been charging the US. The announcement was met with a brief surge in the crypto market, but this was short-lived as the full scope of the tariffs became known.

Crypto Market Reaction

The cryptocurrency market, which had been experiencing a rally, saw a significant dip following the tariff announcement. Bitcoin (BTC) reached a session high of $88,500 but subsequently dropped 2.6% to around $82,876. Ethereum (ETH) dropped over 6% from $1,934 to $1,797, and the total crypto market cap dropped 5.3% to $2.7 trillion.

The Crypto Fear & Greed Index, which measures market sentiment for Bitcoin and other cryptocurrencies, returned a score of 25, classified as extreme fear, in its latest April 2 update. However, prices have clawed back some losses since, with Bitcoin recovering 0.8% to $83,205 and Ether regaining 1.2% to take back $1,810.

Stock Market Reaction

The stock market also experienced significant volatility, with the S&P 500 index erasing over $2 trillion in market cap, equivalent to $125 billion per minute.

Uncertainty Relief and Sell-Off

Rachael Lucas, a crypto analyst at Australian crypto exchange BTC Markets, stated that the brief surge was a case of "uncertainty relief," followed by a sell-off as the full tariff details were released. "On BTC Markets, trading volume surged 46% as local traders scrambled to reposition. Big players took profit on the spike, while smaller investors hesitated," she said.

Market Expectations

Lucas added that if China or the European Union "hit back hard," expect another round of panic selling. US Treasury Secretary Scott Bessent urged US trading partners against taking retaliatory steps, arguing that the tariffs were the "high end of the number" if they did not try to add more levies in response, which could provide a "ceiling" and certainty for markets.

Certainty and Market Reaction

David Hernandez, a crypto investment specialist at crypto asset manager 21Shares, stated that markets experienced significant volatility during Trump’s speech, but the clarity provided by the tariff announcement could be a good thing in the long term. "Although the tariff rates were slightly higher than expectations, the announcement provided much-needed clarity on the scope and scale of the policy," he said.

Markets thrive on certainty, and with speculation now largely removed, institutional investors may see an opportunity over the coming days to take advantage of compressed valuations. Hernandez speculates that global responses will be key for the market going forward, with Mexico and key East Asian economies, including China, South Korea, and Japan, evaluating countermeasures.

Conclusion

The cryptocurrency market experienced a significant downturn following Trump’s national emergency declaration and tariff announcement. The brief surge in the crypto market was short-lived, and the full scope of the tariffs led to a significant sell-off. The market reaction was also influenced by the stock market, which experienced significant volatility. The uncertainty surrounding the tariffs has been alleviated, and with clarification on the scope and scale of the policy, markets may see an opportunity to take advantage of compressed valuations.

FAQs

Q: What were the tariffs imposed by the US on other countries?

A: The US imposed a 10% tariff on all countries, with some nations facing even higher rates, such as China with a 34% tariff, the European Union with a 20% tariff, and Japan with a 24% tariff.

Q: How did the cryptocurrency market react to the tariff announcement?

A: The cryptocurrency market experienced a significant downturn, with Bitcoin (BTC) dropping 2.6% to around $82,876 and Ethereum (ETH) dropping over 6% from $1,934 to $1,797.

Q: What was the impact on the stock market?

A: The stock market experienced significant volatility, with the S&P 500 index erasing over $2 trillion in market cap, equivalent to $125 billion per minute.

Q: What is the impact of the tariff announcement on the cryptocurrency market?

A: The uncertainty surrounding the tariffs has been alleviated, and with clarification on the scope and scale of the policy, markets may see an opportunity to take advantage of compressed valuations.

Q: What is the Crypto Fear & Greed Index?

A: The Crypto Fear & Greed Index measures market sentiment for Bitcoin and other cryptocurrencies, with a score of 25 indicating extreme fear.

Q: What is the current market situation?

A: Prices have clawed back some losses since the tariff announcement, with Bitcoin recovering 0.8% to $83,205 and Ether regaining 1.2% to take back $1,810.