Trump Tariffs Trigger Crypto Market Plunge
Trump Tariffs Trigger Crypto Market Plunge
The cryptocurrency market experienced a significant downturn on April 6th, mirroring a sharp decline in US stock futures. This market reaction followed the Trump administration's escalation of its global tariff strategy, imposing a 10% tariff on all countries, with higher rates levied on specific nations such as China (34%), the European Union (20%), and Japan (24%).
Bitcoin (BTC) saw a 6% drop in the preceding 24 hours, trading around $77,883. Ethereum (ETH) suffered an even steeper decline, falling over 12% to $1,575 (data from CoinGecko). The overall cryptocurrency market capitalization plunged by more than 8% to $2.5 trillion.
While prices partially recovered later, with Bitcoin reaching $78,500 and Ethereum hitting $1,594, the Crypto Fear & Greed Index registered an extremely fearful score of 23 on April 7th.
Charlie Sherry, head of finance at BTC Markets, attributed the initial drop to lower liquidity in global markets on Sundays, where large sell-offs can disproportionately impact prices. He linked the trigger directly to President Trump's tariff announcements, creating uncertainty in global trade relations.
Market Reactions and Predictions
Despite the initial crash, some traders anticipate a potential Bitcoin breakout. The significant drop in US stock futures is noteworthy, with the S&P 500 futures falling nearly 4%, Nasdaq also declining, and Dow Jones Industrial Average futures sinking by over 8%. The Kobeissi Letter even described the S&P 500 as entering "bear market territory." Tom Dunleavy warned of the possibility of the "worst three-day move for US stocks of all time" if the futures trends held.
Billionaire investor Bill Ackman speculated that Trump might postpone the tariffs to facilitate negotiations, but Trump himself doubled down, claiming the tariffs were essential to address US financial deficits. He controversially referred to the tariffs as "medicine" needed to fix the economic situation. This contrasted with statements from US National Economic Council Director Kevin Hassett, who noted that over 50 countries were negotiating new trade deals in response to the tariffs, and US Treasury Secretary Scott Bessent, who urged against retaliatory measures.
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