The cryptocurrency market took a nosedive on February 1 following the announcement of fresh U.S. import tariffs imposed by President Donald Trump. Bitcoin (BTC) and major altcoins suffered significant losses as investors reacted to the heightened economic uncertainty.
Trump’s Tariff Move Sends Shockwaves
The U.S. government’s decision to enforce a 25% tariff on imports from Canada and Mexico, along with a 10% tax on Chinese goods, has deepened global trade tensions. As a result, investors shifted into a risk-off mode, triggering a sharp sell-off across financial markets, including crypto assets.
Bitcoin saw a steep decline of over 5%, hitting a low of approximately $91,200 before rebounding to around $94,000. Despite this slight recovery, BTC remains nearly 13% below its all-time high of $109,000. Market panic led to a surge in Bitcoin’s trading volume by over 200%, reflecting strong selling pressure.
Altcoins Follow Bitcoin’s Lead
Bitcoin’s downturn had a ripple effect across the broader crypto market. Ethereum (ETH) experienced a drastic 20% decline, while XRP plummeted by 22%. Solana (SOL) dropped by 8%, and Binance Coin (BNB) suffered a 15% loss. The global crypto market cap shrank by nearly 12%, settling at $3.15 trillion.
Market Sentiment Takes a Hit
Following Trump’s inauguration on January 20, Bitcoin and other digital assets experienced a notable rally. However, the introduction of new trade tariffs has abruptly reversed market sentiment. Analysts believe this shift could mark the beginning of a broader market correction.
Adding to the bearish outlook, the Bitcoin: Long Term Holder SOPR (Spent Output Profit Ratio) has shown a declining trend, indicating that long-term investors are selling their assets at losses. Historically, such behavior suggests capitulation—a sign that a deeper correction may be looming.
Experts Warn of Further Downturn
Notable figures in the crypto space, including BitMEX CEO Arthur Hayes, have cautioned that the market could be heading toward a financial crisis. With trading volume rising amid falling prices, many investors fear that selling pressure may persist in the short term.
As the market grapples with geopolitical and economic uncertainties, traders and investors remain on high alert, closely monitoring further developments that could influence Bitcoin’s next major move.
